Education IRA

education IRA investment & finance definition
A type of Individual Retirement Account (IRA) that allows parents to save money to pay for their children's' education. This type of IRA has very little to do with retirement.

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. The education IRA is now refered to as the Coverdell ESA.

Education IRA
A type of individual retirement account enabling the contribution of up to $500 per year for each child up to the age of 18 by the parents in the family.

Education IRA: Education IRA’s are available to help finance a child’s education. Contributions of up to $2,000 may be made in any given year, depending on income. Now called the Coverdell Education Savings Account.

Education IRA: A tax-advantaged savings vehicle used to pay the qualified higher education expenses of a designated beneficiary.
Effective date: In a new issue, the date on which the SEC releases the offering.

The Education IRA is in a category all its own. Your child could have a traditional IRA or a Roth IRA, but you can only invest a total of $4,000 or $5,000 yearly into one of those.

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Originally the concept of education IRAs was meant to provide a tax-deductible benefit that would defer taxes on contributions until the time of withdrawal, but the accounts were limited in size to only $500 per year.

Education Savings Account: Formerly known as the Education IRA, the Coverdell Education Savings Account allows you to make annual investments that grow tax-deferred, for the purpose of funding future education expenses.

See also: IRA, Cover, Income, Right, Limit