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The funds in an education IRA can be withdrawn tax free when they are needed for educational purposes.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. 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 >>
  3. How does an IRA grow over time?

    Learn how the magic of compounding helps grow individual retirement accounts, or IRAs. IRAs are one of the most proven options ... Read Answer >>
  4. Can I contribute to both a SEP IRA and a regular IRA?

  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. I earn more than the income limit for both a Roth and Traditional IRA deduction. ...

    It is always a good choice to fund the individual retirement account (IRA), even if the owner is not eligible to claim the ... Read Answer >>
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