Education IRA

A savings plan for higher education. Parents and guardians are allowed to make nondeductible contributions to an education IRA for a child under the age of 18.

Investopedia Says:
The funds in an education IRA can be withdrawn tax free when they are needed for educational purposes. The education IRA is now the Coverdell ESA.

Related Links:
Overwhelmed by increasing tuition costs? The U.S. government can help you save money for your children's education. Investing In Your Child's Education
Retirement and education financing are the two most important planning items for taxpayers. Don't Forget The Kids: Save For Their Education And Retirement
Before you fund one of these education-savings vehicles, be sure you know their differences. Choosing The Right Type Of 529 Plan

Form of Individual Retirement Account allowing parents to contribute up to $500 per year for each child up to the age of 18. This $500 limit is reduced for married couples filing jointly with Adjusted Gross Incomes between $150,000 and $160,000, or singles reporting incomes between $95,000 and $110,000. Couples with incomes over $160,000 and singles with incomes over $110,000 may not contribute to Education IRAs. Contributions to Education IRAs do not generate tax deductions. However, assets in the Education IRA grow tax free, and principal and earnings can be withdrawn tax free as long as the proceeds are used to pay for education expenses at a postsecondary school, including tuition, fees, books, supplies, and room and board. Money in Education IRAs can be invested in Stocks, Bonds, Mutual Funds, and other investments suitable for regular IRAs.