What is the Education IRA?
The Education IRA is a savings plan which allows you to save for the continuing
education of anyone you know under the age of 18. For Education IRA purposes,
the child is the beneficiary. Each beneficiary may receive one $500 contribution
per year.
Who is eligible to participate in an
Education IRA?
Single filers with a modified adjusted gross income of $95,000 or less,
and couples with modified adjusted gross income of $150,000 or less are
eligible to contribute up to $500 per beneficiary per year. A smaller
maximum annual contribution is allowed if the modified adjusted gross
income does not exceed $110,000 for single filers or $160,000 for couples
filing jointly.
Contributions to an Education IRA can be made regardless of participation
in other IRA programs.
Features of the Education IRA
Contributions to an Education IRA are not tax deductible, however, the
earnings will be tax free as long as they are used for qualified educational
purposes.
Contributions can be made until the beneficiary reaches the age of
18. If the funds in the Education IRA are not used for the beneficiary,
they can be rolled over to certain family members of the beneficiary.
Distribution of the funds in the Education IRA must be completed by
the time the beneficiary has reached the age of 30. If the funds have
not been distributed or rolled over by the age of 30, the earnings
accumulated will be taxable and subject to a 10% IRS penalty tax.
How do I find out more about the Education
IRA?
Simply see any of our IRA representatives. We will explain the nature
of these accounts, your investment options and help you establish your
new Education IRA.
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