Retirement Plans - Educational IRA / Coverdell IRA

An educational IRA allows individuals to contribute up to $2,000 in after-tax dollars to an educational IRA for each student who is under the age of 18 years of age. The money is allowed to grow tax deferred and the growth may be withdrawn tax free, as long as the money is used for educational purposes. If all of the funds have not been used for educational purposes by the time the student reaches 30 years of age, the account must be rolled over to another family member who is under 30 years of age or distributed to the original student and is subject to a 10% penalty tax as well as ordinary income taxes.



529 Plans


Related Articles
  1. Professionals

    IRA Rules and Regulations

    Series 6, IRA Rules and Regulations. In this section: IRA Contribution Catch-Ups, IRA Rollover and Transfer Rules, Penalties for Early Withdrawals from and Excess Contributions to IRAs
  2. Professionals

    Individual Plans

    Individuals may set up a retirement plan for themselves that are qualified and allow contributions to the plan to be made with pre-tax dollars. Individuals may also purchase investment products ...
  3. Professionals

    Education Plans

    Education Plans
  4. Professionals

    IRA Rules and Regulations

    FINRA/NASAA Series 26 Section 4 - IRA Rules and Regulations. In this section IRA contributions and catch-ups, rollover and transfers, penalties for early withdrawals from and excess contributions ...
  5. Retirement

    SEP IRAs: Distributions

    By Denise Appleby Because the funding vehicle for an SEP is a Traditional IRA, the distributions rules of a Traditional IRA also apply to SEP assets.Traditional IRA Distributions. Distributions ...
  6. Retirement

    Traditional IRAs: Distributions

    By Denise ApplebyDistributions from Traditional IRAs must occur eventually. Until the owner reaches the mandatory distribution age, distributions are optional. The tax and penalty applied to ...
  7. Retirement

    What's the Tax Hit on an IRA Withdrawal?

    How much taxes you'll pay on IRA withdrawals depends on a variety of factors. Use this guide to plan ahead.
  8. Retirement

    Top 10 Mistakes To Avoid On Your IRA

    IRA rules are complicated. It's easy to make mistakes – and they can cost you big time.
  9. Professionals

    Individual Retirement Accounts (IRAs)

    Contribution and Distribution Considerations
  10. Retirement

    SIMPLE IRAs: Distributions

    By Denise Appleby Distributions from SIMPLE IRAs must occur eventually. Until required distribution rules apply, distributions are usually elective . The tax and penalty treatment of distributions ...
RELATED TERMS
  1. Education IRA

    A savings plan for higher education. Parents and guardians are ...
  2. Same Property Rule

    A regulation relating to IRA rollovers stipulating that whenever ...
  3. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  4. Lifetime Learning Credit

    A provision of the U.S. federal income tax code that lets parents ...
  5. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  6. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
RELATED FAQS
  1. Can I use my IRA to pay for my college loans?

    Learn about how to use your IRA retirement savings to pay for your college loans, including how to avoid the 10% early withdrawal ... Read Answer >>
  2. Are Simple IRA taxes the same as traditional IRA taxes?

    Discover the tax difference between a SIMPLE IRA and a traditional IRA before you determine which retirement plan is the ... Read Answer >>
  3. Is it permissible for a 70-year-old person to buy an IRA?

    It depends. For Roth IRAs, there are no age restrictions. For Traditional IRAs, there are no age restrictions if you are ... Read Answer >>
  4. What is the difference between a ROTH, SEP and Traditional IRA?

    The Roth IRA was established in 1996 as the newest addition to the individual retirement accounts (IRAs) available to individuals. ... Read Answer >>
  5. Can an IRA be used as security for a loan?

    The IRS prohibits the use of an IRA as security for a loan. If an individual borrows money against his or her IRA, the IRA ... Read Answer >>
  6. Can I take money out of my Individual Retirement Account (IRA) while working?

    Can I take money out of my IRA plan if I'm still working? Yes, you can take money out of your IRA plan if you’re ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center