Education IRA


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Education IRA

A type of individual retirement account enabling the contribution of up to $500 per year tax free for each child up to the age of 18 by the parents in the family.

Coverdell Education Savings Account

An account into which one may deposit funds on a tax-deferred basis, on the assumption that they will be used to pay for the education of the account holder. The funds are invested in a portfolio, much like an IRA or another retirement account. If the funds are in fact used for education, withdrawals from a Coverdell account are tax-exempt up to the total cost of education. Importantly, any tax liability on a Coverdell account is assessed at the account holder's bracket, rather than the contributor's. This protects the account holder from an excessive tax liability in the event a wealthy parent made most or all of the contributions. It was formerly called an education IRA.

Education IRA

References in periodicals archive ?
Investments with potential, implemented along with risk management strategies, can make an ideal addition to your retirement portfolio or as part of a Coverdell Education IRA or other college funding vehicle.
Reddic currently has $3,000 in an Education IRA that she opened more than a year ago.
So, each record tabulated on the Coverdell Education IRA line may represent several owners (children), none of which is the actual taxpayer.
A taxpayer can establish an IRC section 530 ESA (formerly known as an Education IRA must be under age 18 when the donor makes the contributions.
Starting in 2002, the contribution limit for an education IRA will increase to $2,000.
Since you don't need any earned income to contribute to an Education IRA, if you make too much, gift the dollars to your offspring and have the child make the contribution.
CONGRESS PROVIDED FAMILIES THE opportunity to save for college and to assist in paying their children's college tuition costs by introducing the Education IRA in 1998.
Further complicating the statutory scheme, the Code precludes use of the Lifetime or Hope Credit if the child also receives tax benefits from an Education IRA.
As a prod, they've now given us five IRAs: the traditional, deductible IRA; the non-deductible IRA; the rollover IRA; the Roth IRA; and the Education IRA.
Taxpayers may contribute up to $500 per child per year in an account that must be designated as an education IRA when it is created.
In addition to the expansion of withdrawals for IRAs, Congress created a special IRA account named the Education IRA for education expenses.
The income generated by the education IRA is tax free if the money is used for higher education expenses.

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