Education IRAs are available as of January 1998.Renamed Coverdell Education Saving Account in 2002.
One Education IRA can be opened per beneficiary, and a non deductible contribution of $2000 can be made to an Educational IRA by a parent, grandparent or any other person for any other person, under the age of 18.
As of 2004, no Contribution is allowed when modified family annual gross income reaches $220,000. Full $2000 contribution available if income is below $160,000.
Contributions are allowed for both Education IRA and 529 College Saving Plan in same year.
Growth within Education IRA is not taxable and monies eventually removed from an Education IRA are tax free if used for qualified educational expenses.
Qualified educational expense includes elementary, secondary and college expenses.
Contribution deadline is April 15th for the prior year.
Contributions may be made by corporations and tax-exempt entities.
If money is not spent or used for educational purposes for designated person, then Education IRA can be rolled over into an Education IRA for a broadly defined family member of the original beneficiary.
Withdrawals from Education IRAs not used for educational purposes expenses may be subject to both income tax and a 10% IRS penalty tax.
Various mutual fund investment choices and other investment choices are available for funding these types of Education IRA accounts.
All Mutual Funds, Variable Annuities and Variable Life Insurance policies are offered by prospectus ONLY. For complete information including charges and expenses obtain a prospectus, and read it carefully before you invest.
Mutual Fund, Variable Annuity and Variable Life prospectuses are available directly from the issuing companies when product information is requested, and in some cases, they can be downloaded directly on the issuing company's internet website.
The tax deferral characteristic associated with variable annuities is not needed when used in an account that is by definition tax deferred (retirement accounts) and according to some sources variable annuities generally have higher fees and internal expenses than mutual funds.
Systematic and dollar cost averaging within Mutual Funds, Variable Annuities and Variable Life insurance policies does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in securities regardless of fluctuating prices and the investor should consider his or her financial ability to continue purchases through periods of low price levels.
Investing in stocks, bonds, mutual funds and variable annuities does not guarantee a profit. All of these investments can lose money.
Stocks, bonds, mutual funds and variable annuities are not FDIC insured.
