Education
IRAs, One step closer to your child's success.
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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.
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What is an Education
IRA?
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| The
Education IRA offers tax-advantaged savings for all levels of
education.
Earnings
on contributions of up to $500 a year per child (in 2001)
and $2,000 (in 2002) are tax-free if the proceeds are used
for higher education (in 2001) and education at any level
in (in 2002). In order to maintain a tax-deferred status,
accounts must generally be used by age 30, but unused balances
may be transferred tax-free into education IRAs for other
family members.
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What
is a Qualified Higher Education Expense?
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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
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Who
can contribute to an Education IRA?
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The
answer to that question is "almost anyone". There are two
key limitations:
- Each
child can receive a total of $2000 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.
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Can
I roll over funds from another IRA?
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| 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?
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| 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?
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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.
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Members
of: Financial Industry Regulatory Authority(FINRA),
S.I.P.C.
send questions or comments about this web site to f.otalvaro@brokerwebstation.com
Copyright © 1998
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