Education IRA
Education IRAs May Help Ease the Costs of a College Education
The national average cost of just one year of college is currently
$10,458 at public four-year institutions and $22,533 at private
four-year schools.* As these figures continue to increase, so do the
concerns among the parents and grandparents of future coeds. Will you be
able to meet the financial challenge of providing your child or
grandchild with a quality education? The Education IRA might help you
say yes.
You may establish a tax-advantaged Education IRA for any child under
age 18, including a grandchild. Contributions to an Education IRA are
not deductible. However, withdrawals used for qualified higher education
expenses generally are tax-free and are not subject to a 10 percent IRS
penalty for early withdrawal.
Qualified higher education expenses include tuition, fees, books,
supplies and equipment required for attending an institution of higher
learning (e.g., a college, university or vocational school). Room and
board expenses also qualify if the child is at least a part-time
student.
The maximum Education IRA contribution per child is $500 annually. The
contribution limit phases out for contributors as follows: Singles with
an Adjusted Gross Income (AGI) between $95,000 and $110,000, and married
couples filing jointly with AGI between $150,000 and $160,000. Note: If
your AGI prevents you from contributing to your child or grandchild's
Education IRA, you may want to consider asking someone else (e.g., a
family member) with an AGI below the eligibility threshold to contribute
instead.
What if the Child Does Not Attend College?
You may elect a tax-free rollover of funds from one child's Education
IRA to the Education IRA of another family member. This feature may be
useful if your child or grandchild chooses not to attend college, or if
there are funds remaining in the child's account after he or she
graduates. Note: The funds in an Education IRA must be distributed, or
rolled over to another family member's Education IRA, within 30 days
after the child reaches age 30.
Also see 529 Information
Also consider college 529 Plans - see the information below for details
Fidelity Investments fidelity advisor 529 college planning new account
application
Fidelity Investments fidelity advisor 529 college plan overview
Fidelity Investments Fidelity Advisor 529 Distribution Atlantic Financial
Fidelity Investments Fidelity Advisor 529 New Account Application NH Atlantic
Financial 746861
Fidelity Investments Fidelity Advisor 529 Plan Benefits Atlantic Financial
Fidelity Investments Fidelity Advisor 529 Plan Cost of Waiting Atlantic
Financial
Fidelity Investments Fidelity Advisor 529 Plan Overview Benefits Atlantic
Financial .PDF
Fidelity Investments Fidelity Advisor 529 plan the cost of waiting Atlantic
Financial
*Source: The College Board, a national nonprofit membership
organization. Costs reflected in these figures include tuition,
fees, room, board, books, supplies, transportation and other
expenses for the 1998/99 school year.
For more information or to have us answer any questions you may have,
please contact Atlantic Financial, or contact us
Also See:
College Planning Steps |
College Planning Information
|
Section 529
College Savings Plan
529 college savings plans
