Accounts


Educational Savings Account

 

  Coverdell Education Savings Account Nizari Credit Union College Savings Account
Income Limits  Contribution is phased out if income is $95,000 - $110,000 if single, or $190,000 - $220,000 if married No income limits for contribution
Contribution Limits  $2000 per year per beneficiary  $6000 per year per beneficiary
Control  Beneficiary may assume control at age 18 or 21 in most states  Account is controlled by custodian
Uses  Education expenses for kindergarten through high school, college and graduate school. Expenses include tuition, books, and lodging  Education expenses for college and graduate school. Expenses include tuition, books, and lodging
Ability To Change Beneficiary   Yes  Yes
Penalties on
Non-Qualified Withdrawals
10% IRS Penalty on earnings 10% Penalty on earnings
Earnings  1/2 % over declared dividend  1/2 % over declared dividend
Insurance  NCUSIF insured  NCUSIF insured
Tax Treatment Tax exempt.  In case of withdrawals for non-educational purpose, all earnings will be taxed in the year it is withdrawn  Earnings subject to tax every year. Custodian will receive 1099-INT each year.


There are two things to keep in mind for members wanting to take advantage of the above two education savings program offered by Nizari Progressive Federal Credit Union:

  • Coverdell ESA may not be sufficient for all members since there is limit of $2,000 per year per beneficiary, imposed by IRS regulation.
  • Nizari College Savings account provides additional means of saving and provides a better interest rate than most low risk money market accounts. We strongly encourage saving on a regular monthly basis rather than an annual lump sum of $6,000.


Application and Contribution Form for ESAs

Coverdell ESA Trust Application
Coverdell ESA Contribution Form




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"APY" refers to Annual Percentage Yield
"APR" refers to Annual Percentage Rate

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