Education IRA
What is it? A tax-deferred savings and investment account for educational expenses. Parents are allowed to put away $500 a year for each child or grandchild under the age of 18. Like the Roth IRA, contributions aren?t tax-deductible, but withdrawals are tax-free. The money must be used for college or graduate school tuition, room, board, or books, by the time the student turns 30. At that point, the funds will be distributed to the beneficiary and will be subject to a 10% penalty and income taxes. Before then, however, the funds can be transferred to a new Education IRA for another family member.Added By: Carter
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