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 The funds in an Education IRA can be withdrawn tax free when they are needed for educational purposes.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:
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.