Brokerage Accounts

Education Accounts

Education accounts help adults save for the future educational expenses of children in their care. Two types offered by Scottrade are Coverdell Education Savings Accounts (ESAs) and custodial accounts.

Coverdell Education Savings (ESA)

Coverdell Education Savings Accounts (ESAs) provide investors with a tax-advantaged choice for saving for a child's higher education expenses. Formerly known as an Education IRA, the Coverdell ESA allows investors to choose any combination of stocks, mutual funds and bonds to achieve their investment goals.

ESAs have no minimum investment or balance. Withdrawals are tax-free for qualified educational expenses, and the investor, also known as the responsible adult, may contribute up to $2,000 per year per child until the child turns 18, subject to income limits.

Custodial Account

Custodial accounts allow a parent or legal custodian to set up and manage an account for the benefit of a minor child. Depending on your state, the account can be established either under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. The custodian controls the account until the minor reaches the age of 18 or 25, depending on the age of termination for your state.

There are no contribution or income limitations with custodial accounts, and withdrawals can be used for any purpose without penalty. Custodial accounts also have tax advantages because up to $950 in earnings are tax-free, and the account qualifies for the annual $13,000 federal gift tax exclusion.

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The information and content provided in the Scottrade® Knowledge Center is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.