Education IRA

DEFINITION of '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.

BREAKING DOWN 'Education IRA'

The funds in an education IRA can be withdrawn tax free when they are needed for educational purposes.

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RELATED FAQS
  1. Can I contribute to both a 529 plan and a Coverdell education savings account?

    You can contribute to both, and when your child is ready to attend college, as colleges do accept payments from both. There ... Read Answer >>
  2. I want to take advantage of retirement savings. Can I contribute $6K to a Roth IRA, ...

  3. What is the best way to save for private school expenses? A 529 plan, a Coverdell ...

    If the goal is to put the money in the plan towards private school expenses, then the Coverdell Education Savings Account ... Read Answer >>
  4. Can I hold multiple IRAs?

    IRAs are investments made to plan for retirement, which offer certain tax advantages, depending on the type, and often matching ... Read Answer >>
  5. A parent would choose to set up a Coverdell Education Savings Account for a child ...

    A parent would choose to set up a Coverdell Education Savings Account for a child in order to save for college expenses AND: ... Read Answer >>
  6. How can I fund A Roth IRA if my income is too high to make direct contributions?

    Roth IRAs are not available to you if you are a high income earner - unless you use the following strategy. Read Answer >>
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