Education IRAs, One step closer to your child's success.

What is an education IRA?
What is a qualified higher education expense?
Who can contribute to an education IRA?
Can I roll over funds from another IRA?
Am I allowed to change the Beneficiary?
Who is a member of the Family?

Every parent looks at their child and wonders what the future holds.

  • What jobs will be available?
  • What kind of training will my child need--college or technical school?
  • Will the money be there for their education

You may not know the answer to the first two questions, but you have a new resource to help you with the last --The Education IRA.

What is an Education IRA?
An Education IRA is an investment tool created for the purpose of paying for the future cost of a child's post-secondary education. The plan allows total after-tax contributions of $500 per year for each child until they reach the age of 18. These contributions and their subsequent earnings are tax-free when withdrawn to pay for qualified education expenses.
What is a Qualified Higher Education Expense?

A qualified higher education expense is one that is required for the enrollment or attendance by your child at an eligible educational institution.
These expenses include:

  • tuition,
  • fees,
  • books,
  • supplies and
  • entertainment
Who can contribute to an Education IRA?

The answer to that question is "almost anyone". There are two key limitations:

  • Each child can receive a total of $500 per year in contributions from all sources. It does not make a difference if this is done in a single account or multiple accounts designed to benefit the same child.
  • A person may be limited in the amount of their contribution if their modified adjusted gross income exceeds $95,000 for single filers or $150,000 for joint filers. Above these income levels, the ability to contribute is phased out. If income exceeds $110,000 for single filers, or $160,000 for joint filers, no contribution is allowed.

The Education IRA does not specify that the contributor must be a member of the family. With this broad range of potential contributors, it is possible that more than one person may want to contribute for the same child. A coordinated effort should be encouraged to avoid excess contributions.

Or price in one extended hors trading system than you would in another extended hours trading system.

Can I roll over funds from another IRA?
You can roll over funds from one Education IRA to a new or existing Education IRA only. The funds, however, must benefit the same child or an eligible member of the child's family. A rollover contribution does not affect the $500 annual contribution limit. Rollovers must be completed within 60 days of the initial distribution and are limited to one per 12-month period.
Am I allowed to change the Beneficiary?
You may change the designated beneficiary (child). An example of why someone may wish to change the beneficiary is the current beneficiary has completed their education and there are funds remaining. The only stipulation is that the new beneficiary must be an eligible member of the family.
Who is a member of the Family?

There are several possible family members. They would include:

  • Grandparents
  • Parents
  • Spouses
  • Brothers and Sisters
  • Children and their Spouses

It is important to remember that even with this extended range of family members contributions can be made only for those under the age of 18.

Members of: National Association of Securities Dealers (FINRA), S.I.P.C.

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