Coverdell Brochure

Coverdell Education Savings Account A Coverdell Education Savings Account (ESA) allows you to make nondeductible contributions on behalf of a child each year until the child reaches age 18*. Earnings generated on ESA contributions remain tax deferred. When a child uses ESA assets to pay for qualified education expenses, the contributions and earnings are distributed tax free. *Age limit does not apply to special needs individuals.

A BRIGHT FUTURE STARTS HERE. A Coverdell Education Savings Account (ESA) is an easy way to start saving for a child's education.

4254 SAW MILL RUN BLVD PITTSBURGH PA 15227 SALES@GBU.ORG WWW.GBU.ORG GBU-COV-BR-0321

Qualified Education Expenses

Can My ESA Be Transferred?

Elementary, Secondary or Post-Secondary Tuition and fees Books, supplies and equipment Tutoring Room and board Special needs services

You may transfer or rollover ESA assets to a new or existing ESA for the same child, or to an eligible family member's ESA. There is no limit on the number of transfers you may make, but rollovers must be completed within 60 days of the distribution and may only occur once in a 12month period.

Can the ESA Be Used for Non-Education Expenses?

If a student withdraws more from their ESA than the cost of their qualified education expenses for the year, a portion of the distribution is taxable.

Distributions from a Coverdell ESA are not taxed if used to pay qualified educational expenses. The student must include the earnings attributable to the excess distribution in their gross income for the year and pay a 10 percent penalty tax on the taxable earnings, unless a penalty tax exception applies (ex. death or disability).

If the student does not use the ESA assets or does not transfer or rollover the ESA assets to an eligible family member by the time the student reachs age 30*, the ESA is deemed distributed. The student must include the distributed amount in gross income for the year and pay a penalty tax on the earnings if the distribution is not used to pay for qualified education expenses. *Age limit does not apply to special needs individuals.

Who Can Contribute Anyone! Family members or nonfamily members can contribute to a child's ESA, as long as their modified adjusted gross income (MAGI) falls below or within the income limits for the year.

Those who are eligible to contribute may give to more than one ESA on behalf of multiple children, not to exceed the annual contribution limit of $2,000 (or less depending on MAGI) per child. Likewise, any one child may not receive more than $2,000 total per year in ESA contributions.* *Contribution limits of up to $2,000 per year, per child annually. Please consult your tax advisor for questions regarding income limits.

If you receive a military death benefit gratuity or a Servicemembers' Group Life Insurance payment, you may roll over the full amount without taxation to an ESA within one year of receipt.

Eligible family members must be under age 30* and include the child's: Father, mother, stepfather, stepmother or in-law Spouse Brother, sister, stepbrother, stepsister or in-law Child or descendent of child, stepchild, eligible foster child or in-law Niece or nephew or a spouse Aunt, uncle or first cousins *Age limits do not apply to special needs individuals

A lifelong relationship with GBU helps to set children up for future financial success.

Funding Higher Education Through the GBU Foundation, GBU Life assists members in furthering their post-secondary education. GBU Foundation Scholarships are awarded in various amounts for several programs: $6,000 over four years for college freshmen $2,500 over four years for the Clarence O. Affelt Architecture/Fine Art Memorial Scholarship $1,000 annual scholarships for college undergraduates, college graduates and twoyear vocational/technical program students.

Scholarship applicants not awarded a GBU Foundation Scholarship are entered into a random drawing for a chance at being awarded one of a predetermined number of one-time, $500 grants or Personal Giving Scholarships.

Each year, the GBU Foundation also helps several high school freshmen meet the costs of transitioning to high school with one-time $250 grants. The GBU Foundation has awarded over $2.3 million in scholarship and grant money over the lifetime of its program.