Coverdell Education Savings Account (CESA)

Coverdell accounts (also known as Coverdell ESAs or CESAs) are federally sponsored custodial accounts that allow an adult to open an account for students under the age of 18.

CESAs offer tax advantaged investing that permits tax-free qualified withdrawals for higher education, as well as elementary and secondary school expenses.

You may open an account with $500W2 in any American Century Investments® fund that typically has a $1,000 fund minimum. However, you cannot choose a second fund until the $1,000 minimum is met for your first fund.

Get to Know CESA

How can I use the money?

Are there account minimums or maximums?

What are the tax considerations?

Who owns and controls the accounts?

Are there any income restrictions?

Are the accounts only for kids?

Can the account be transferred to another beneficiary?

Are there any fees?

How will the plan money affect financial aid?

Allowable CESA Contributions

Depending on your income level, you may be restricted to a limited contribution or you may not be eligible to contribute any amount. Review the Modified Adjusted Gross Income (MAGI)1 phase out ranges below.

Allowable Contribution for 2019/2020


  • Full contribution at MAGI1 of: $95,000
  • Partial contribution phaseout begins: $95,001
  • No contribution at MAGI1 over: $110,000


  • Full contribution at MAGI1 of: $190,000
  • Partial contribution phaseout begins: $190,001
  • No contribution at MAGI1 over: $220,000

1 Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) with standard deductions included.

Ready to Invest?

Get started by reviewing the CESA Disclosure Statement and Custodial Agreement  and downloading the application, or call us:

Download Application

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

W2 Minimum initial investment is $1,000 for IRA and CESA accounts, and $2,500 for non-retirement accounts, but these minimums are waived with an initial investment of at least $500 per account and automatic investments of at least $100 per month. If your account balance falls below the minimum, or if you cancel your automatic monthly investment plan prior to reaching the minimum, American Century Investments may redeem the account and send the proceeds to you. Prior to doing so, we will notify you and give you 90 days to meet the minimum or reinstate your automatic monthly investment plan.