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Education Savings Accounts (ESAs)

Start saving money to help a child, grandchild or any young person pay for education expenses.

Coverdell Education Savings Accounts (ESAs) are an ideal way to begin saving money to help a child, grandchild or any young person pay for education expenses.

ESA contributions are not tax-deductible, but they may earn interest tax-deferred until distributed. The child will not owe tax on any distribution from the account if it is equal to or less than the child’s qualified education expenses at an eligible educational institution for the year.

Amounts distributed from an ESA that exceed the child’s qualified education expenses may be subject to income tax and to an additional 10 percent penalty tax. If the child does not need the money for education expenses, the assets may be rolled over or transferred to a qualified family member’s ESA or to a qualified tuition program (QTP).

The maximum contribution limit per child is $2,000 each tax year. The deadline for making a 2018 contribution is April 15, 2019.

ESA Features

  • Qualified expenses for K-12 school costs
    This includes home computer equipment, Internet access and tutoring.
  • Waiver of age limitations for children with special needs
    The law allows contributions for individuals with special needs beyond age 18 and no mandatory pay-out at age 30.

ESA Investment Options

  • Savings Account - $100 minimum deposit or $25 with automated deposits
  • Certificate Accounts - $100 minimum deposit or $25 with automated deposits, 6-month, 1-year and 2-year terms

ESA Summary

Qualifications The designated beneficiary must be an individual under the age of 18. The age-18 limitation will not apply to any designated beneficiary with special needs.
Maximum Contributions 2018-19
$2,000 per beneficiary.
Note: Contributions do not count against the limits for IRAs.
Tax Status of Earnings Earnings grow tax-deferred. Tax-free on withdrawals toward qualified education expenses.
Contribution Restrictions Yes, 2018 & 2019 contributions phase out between $95,000 - $110,000 for single tax filers and $190,000 - $220,000 for joint tax filers.

If income exceeds phase-out limit, contributions are not allowed.
Tax Deduction No.
IRS Penalties for Early Withdrawal None if:
  • For payment of qualified education expenses
Required Distributions Must be completed 30 days after beneficiary reaches age 30 (except for special needs children) or death.
Contribution Age Limit Not allowed after attaining age 18 except for special needs children.

ESA Dividend APYs

IRA / ESA Savings



APY (1.98% rate)

6-Month IRA / ESA



APY (2.03% rate)

1-Year IRA / ESA



APY (2.18% rate)

2-Year IRA / ESA



APY (2.47% rate)


Open an ESA


Service your ESA


ESA Information and Help