Save and pay for education expenses with a tax-advantaged Coverdell account

A Coverdell Education Savings Account (ESA) can play an important role in helping pay for qualified education expenses.

Who is eligible?

Your clients can contribute to a Coverdell ESA even if they don’t have earned income. The contribution is limited to $2,000 a year for each beneficiary until the age of 18.*


The ability to contribute is phased out as your client’s adjusted gross income increases from:


  • Less than $110,000 for individuals
  • Less than $220,000 for married couples filing jointly

Who would benefit?

Clients who expect to use the funds for K-12 and beyond

A Coverdell ESA can be used for education expenses such as tuition, books, computers, software, peripherals, internet access, and room and board for kindergarten through high school, college and graduate school.


Earnings grow tax-free with the potential to help offset rising education costs. Distributions are tax-free if used to pay qualified education expenses.


Clients who may want the beneficiary to gain control of the account

Generally, the beneficiary gains control at the age of majority — 18 or 21 in most states.


Clients who want flexible investment options

Most  American Funds are available in Coverdell Education Savings Accounts; account owners can change investments as often as they want.

Objective-focused — These funds of funds offer broadly diversified portfolios in a single investment.

Customization — Build an education savings portfolio of your preferred American Funds, or select a single-fund option. Either way, you control the investment mix.

Note: Tax-exempt funds are not available for Coverdell ESA investments.

Other resources

Other resources

Coverdell ESA account application

Compare college savings plans

Compare three popular ways your clients can save for college.

College savings calculator 

Compare the cost of different colleges or use national averages for either public or private colleges.

Account setup and service

To set up a new Coverdell ESA, visit the Account Resource Center to easily access all of the required paperwork, resources and more.

* If the beneficiary is a special needs child, contributions can still be made to the account after the beneficiary reaches age 18.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
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