Earning tax-free dividends for education expenses is just smart.
Although classified as an IRA, Coverdell ESAs are used for qualified education expenses at any time during a child’s life. Earnings are tax-free and withdrawals made before the child turns 30 will be tax-free if used for qualified education expenses. Participation is subject to income restrictions.
Traditional and Roth IRAs are typically used as savings vehicles for retirement planning.
Savings Account Rates
EFFECTIVE 10-1-2026
| Account | Min. Balance to Open | Min. Balance to Earn APY | Dividend Rate | APY* |
|---|---|---|---|---|
| Educational Savings | $500 | $500 | 1.25% | 1.26% |
*APY = Annual Percentage Yield. Share Account dividends are compounded and paid monthly. Dividend Rate and APYs are variable and are subject to change. If you close your share account prior to the payment of dividends, you will not receive the accrued dividend. Fees could reduce earnings on an account.
Get started today:
- Visit a branch or call 202-318-1991 to open a Coverdell Education Savings Account
- Learn more about Financing an Education
- Use our Calculators
