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The funds in an education IRA can be withdrawn tax free when they are needed for educational purposes.

RELATED TERMS
  1. Coverdell Education Savings Account ...

    A tax-deferred trust account created by the U.S. government to ...
  2. Form 1099-Q

    An IRS form that an individual who receives distributions from ...
  3. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  4. Form 8606

    A tax form distributed by the Internal Revenue Service (IRS) ...
  5. Lifetime Learning Credit

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

    An investing tool used by individuals to earn and earmark funds ...
Related Articles
  1. Managing Wealth

    Education Savings Account Tutorial

    This comprehensive guide goes through what an Education Savings Plan is and how to set one up, contribute to it and withdraw from it.
  2. Retirement

    Don't Forget The Kids: Save For Their Education And Retirement

    Retirement and education financing are the two most important planning items for taxpayers.
  3. Financial Advisor

    Why Coverdell ESAs May Trump 529 Plans

    Coverdell ESAs still trail 529 plans in popularity by a wide margin due to their low contribution limits. But these accounts can be a viable alternative.
  4. Managing Wealth

    529 Plan Tutorial

    This comprehensive guide goes through what a 529 plan is and how to set one up, contribute to it and withdraw from it.
  5. Retirement

    How To Convert A Non-Deductible IRA Into A Roth IRA

    Here's a step-by-step guide for transferring one retirement plan into another.
  6. Retirement

    The Benefits of Starting an IRA for Your Child

    Many financial experts and educators believe that the earlier children begin learning about money, the better their chances for financial stability in the future.
  7. Taxes

    Avoiding Too Much Tax On Your Distributions

    IRA assets can't be taxed twice - find out how to avoid paying the second time around.
  8. Taxes

    Tax-Smart Ways To Help Your Kids/Grandkids Pay For College

    Learn about plans and accounts that allow you to efficiently save for your child or grandchild’s education while shielding the savings from the IRS as much as possible.
  9. Retirement

    11 Things You May Not Know About Your IRA

    These little-known features will help you get the most out of your retirement savings.
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. 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 >>
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  4. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
  5. Quasi Contract

    A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A normal ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center