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  5. Education Savings and 529 plans

Education Savings Accounts

Smart plans. Knowledgeable advisors.

ESA ESA
ESA
529 Plans
529 Plans

Coverdell ESA


FDIC insured
 

The flexibility of a Coverdell education savings account (ESA) makes it easy to start saving today. ESAs are designed to meet your needs as you provide the funds for a promising education. Comerica CD-ESAs provide investment alternatives with flexible terms, competitive rates and customized CD deposit options.

Advantages¹ ² ³
  • Tax benefits combined with educational savings
  • Tax-free distributions for qualified education expenses, including elementary, secondary and post-secondary tuition; and vocational schooling
  • Any child under 18 can be designated as a beneficiary
Earnings¹ ² ³
  • Accumulate tax-free
  • Are not taxed upon withdrawal from the account if they are used for qualifying educational expenses before the beneficiary’s 30th birthday
Contributions¹ ² ³
  • Will earn interest at competitively priced rates
  • Can be rolled over or transferred to another ESA to benefit another qualified family member
  • Are not tax-deductible
  • Are FDIC insured up to the maximum
Distributions¹ ² ³
  • Are tax-free as long as they are used for qualified education expenses
  • Can be used for qualified expenses, including tuition, room and board, fees, supplies, books, educational computer technology or equipment, uniforms, tutoring, special needs services and internet access

Visit a Comerica banking center near you to get started saving with a Coverdell ESA.

529 Savings Plans


NOT FDIC insured - offered through Comerica Securities, Inc. 
 

Whether a prepaid tuition or a college savings plan, a 529 plan may be used for education-related expenses at all accredited colleges and universities. Any person, married or single, relative or non-relative, can easily contribute. Plan details differ from state to state.4, 5 This versatile option lets you choose from multiple strategies to create a solution that works for your unique needs.

Can be used for

Tuition, room and board, and qualified expenses at accredited colleges5

Earnings

Free from federal tax.5 The more you contribute, the larger your nest egg grows tax-free.

Contributions

Can be used to gift assets - contributions may be free from federal gift taxes for the contributor5

Visit a Comerica banking center near you to get started saving with a 529 savings plan.

Compare your college savings options.

  Coverdell ESA¹ ² ³ 529 Savings Plan⁴ ⁵
Description:

Self-directed educational savings account (similar to an IRA) that is FDIC insured. You can contribute and withdraw at the time the student has educational costs and needs.

Choose from multiple portfolio options. You can contribute and withdraw at the time the student has education costs. Investment choices are limited to state selections and are NOT FDIC insured.
Tax Benefits:

Earnings & withdrawals are tax-free if used for qualified expenses.

Earnings & withdrawals are tax-free if used for qualified expenses. Depending on your state, you may also be eligible for state income tax deductions.
Used For:

Primary, secondary and college education qualified expenses, including tuition, room and board, mandatory fees, books and computers 

College education qualified expenses, including tuition, room and board, mandatory fees, books and computers
Age Limits:

Must be used by age 30, or transferred to another beneficiary or a 529 plan

No age limits. Beneficiary can be any age.
Contribution Limits:

$2,000 per student per year (2020 & 2021)

Varies by state, normally up to $15,000 per year
Income Limits:

Gross income over $220,000 as a married couple or $110,000 for other taxpayers can’t contribute

No income limits for contributors
 

Tools & Resources

Savings for College Insights

1 Investing in a Coverdell Education Savings Account (ESA) does not guarantee that college costs will be met. Contributing to an ESA does not impact your eligibility to contribute to a Traditional, Roth, SEP or SIMPLE IRA.
 
2 Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation
 
3 Additional detail can be found in the Master Terms of Coverdell Education Savings Custodial Accounts
 
4 By investing in a 529 plan outside your state of residence, you may lose available state tax benefits. 529 plans are subject to enrollment, maintenance, administration/management fees and expenses. Make sure you understand your state tax laws to get the most from your 529 plan. If a withdrawal is made for any reason other than a qualified higher education expense, the earnings portion of the withdrawal will be subject to both state and federal income tax, and possibly a 10% federal tax penalty. The value of a 529 plan is subject to risks, which include market fluctuation based on the 529 plan’s portfolio, and economic, political and social circumstances. Additionally, the investor has limited shareholder rights, as there is not a direct ownership interest, which includes limited or no voting rights for the underlying securities. The plan reserves the right to terminate or make changes to the plan at any time. Such changes may include the acceptance of additional contributions or the ability to establish new accounts. Investment objectives, risks, charges and expenses associated with municipal fund securities should be considered before investing in municipal fund securities. The issuer’s official statement should be read carefully before investing.
 
Contact Comerica Securities, Inc. at 800.232.6983 to obtain an official statement that provides more information and that should be read carefully. You should consider the investment objectives, risks, charges and expenses associated with the 529 plan before investing.
 
5 Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation.
 
Securities and other non-deposit investment products offered through Comerica Securities, Inc. are not insured by the FDIC; are not deposits or other obligations of, or guaranteed by, Comerica Bank or any of its affiliates; and are subject to investment risks, including possible loss of the principal invested. Past performance is not indicative of future results. Information presented is for general information only and is subject to change. Comerica Securities, Inc.is a broker/dealer, member FINRA/SIPC and subsidiary of Comerica Bank. Comerica Securities, Inc. is a federally Registered Investment Advisor. Registrations do not imply a certain level of skill or training.

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