Youth Savings Accounts
Encourage your children to start saving with a Youth Savings Account from Bridge Credit Union. First, open a new savings account for each child with our Youth Account Application (or visit our office). Second (optional), print the Parent-to-Kid Savings Contract (P2K) and complete it. This simple contract allows your child to list a savings goal (a bicycle, video game, or other ‘want’ or ‘need’). It’s a great way to reinforce good savings habits and making (and sticking to!) goals.
Coverdell Education Savings Account
College tuition costs have consistently risen at two to three times the rate of inflation over the past decade. If you have a child, a Coverdell Education Savings Account at Bridge Credit Union is an excellent way to save for future college costs. You can also use the account to save for qualified elementary and secondary education costs. Call us at 800.434.7300 to get started.
- You can contribute up to $2,000 per child (under age 18).
- Compared to Section 529 plans, ESAs offer greater control over investments.
- Qualified withdrawals are free of federal income tax.
- Withdrawals may also be used to pay for qualified elementary or secondary school expenses.
- Qualified expenses can include tuition and books, room and board, uniforms, supplies, computers, and Internet access.
Information about Distributions from Coverdell Accounts:
- Distributions are tax-free as long as they are used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board.
- There is no tax on distributions if they are for enrollment or attendance at an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law. Eligible institutions also include any college, university, vocational school or other post-secondary educational institution eligible to participate in a student aid program administered by the Department of Education. Virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post-secondary institutions are eligible.
- The Hope and Lifetime learning credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits.
- If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship. There are contribution limits for taxpayers based on the contributor’s Modified Adjusted Gross Income. Contributions to a Coverdell ESA may be made until the due date of the contributor’s return, without extensions.
- If there is a balance in the Coverdell ESA when the beneficiary reaches age 30, it must generally be distributed within 30 days. The portion representing earnings on the account will be taxable and subject to the additional 10% tax. The beneficiary may avoid these taxes by rolling over the full balance to another Coverdell ESA for another family member. For more details, see IRS Publication 970, Tax Benefits for Higher Education (at IRS.gov) or call 800-TAX-FORM (800-829-3676).
Your contribution to an ESA may be restricted if your modified adjusted gross income is greater than the specified limit.The limit is $95,000 for single filers, or $190,000 for joint filers. Because ESA funds qualify as the student’s asset, they may reduce eligibility for financial aid and scholarships.
Debit Card Roundup
Easily grow your kid’s savings account
Enroll your debit card in Debit Card Roundup and we will round up your debit card purchases to the nearest dollar and deposit the extra change into your kid’s savings account automatically. It’s one of the easiest and painless ways to save!
Call us at 614-466-4988 to enroll today or complete our Debit Card Round-Up Enrollment Form.