Coverdell (Education) IRA
A savings plan for higher education. Parents and guardians are allowed to make non-deductible contributions to an Education IRA for a child under the age of 18. The funds in an Education IRA can be withdrawn tax free when they are needed for educational purposes.
Key Features of a Coverdell (Education) IRA:
Contributions may not be tax deductible
Withdrawals to pay qualified expenses may be tax free. Qualified expenses are:
Tuition
Fees
Books
Elementary and Secondary School Expenses
Computer Technology or Equipment (including online access) that the beneficiary uses while in school
Equipment required for enrollment or attendance at nearly any post-secondary school
Certain room and board expenses also may apply
Contributions not to exceed $2000 per year
Contributions allowed until the child reaches 18
Child has up until age 30 to use the funds
Your tax situation may vary. Consult with a tax advisor for full details on deductibility of contributions, earnings, and early withdrawal penalties.