Education Savings Account F.A.Q.s

What is the Education Savings Account?
The Weber State Credit Union Education Savings Account is a new product formed under the umbrella of a Coverdell Educational Savings Account, or CESA. This account operates much like a ROTH IRA; contributions are made with post-tax dollars, and grow tax-free, and are not taxed at the time of withdrawal, as long as the money is used for qualified educational expenses.

What savings vehicles are available through the Education Savings Account?
Members can place their money in an Education Savings Accumulator, which has no minimum balance and offers a very competitive rate. Members may also place money in an Education Savings CD once they have reached $500.

How do I make withdrawals?
Withdrawals can be made at any time; however, to avoid penalties, withdrawals must be used for Elementary, Secondary, or College expenses. There is a simple withdrawal form that must be completed to receive funds. The information on the form will be submitted to the IRS for tax purposes. Withdrawals used for non-educational expenses are assessed a 10% penalty, plus income tax. The money must be withdrawn or gifted to another family member before the child reaches age 30 to avoid penalties.

How much can I contribute?
There is a maximum of $2,000 per child per year that may be contributed to an Education Savings Account. Anyone can make contributions (e.g. grandparents, parents, children, etc.) to the account, as long as total contributions do not exceed $2,000 per year. Contributions can be made until the child reaches 18 years of age. Automatic deposits are strongly encouraged, and can be set up by a Member Service Representative at any WSCU branch.

Who can set up an Education Savings Account?
Anyone over age 18 can set up an Education Savings Account on behalf of any beneficiary under age 18. However, individuals with a Modified Adjusted Gross Income (MAGI) level over $110,000 per year (or $220,000 if filing jointly) are restricted from opening an account. There is no limit to how many accounts can be set up on behalf of one child, as long as contributions do not exceed $2,000 per year. Contributions can also be made by corporations or trusts.

Are contributions tax-deductible?
While contributions to the College Savings Account are NOT tax deductible, the money will grow tax-free, and can be withdrawn tax-free, as long as withdrawals are made for qualified educational expenses.

What are qualified educational expenses?
Tuition, fees, supplies, books, and room & board expenses all qualify as recognized educational expenses. For more information on qualifying expenses, visit the IRS Coverdell Savings Web site.

For assistance or questions relating to any of the products, accounts or services we offer, please call 399-9728.