Unlike traditional and Roth IRA’s, Education IRA’s are not tools for retirement savings. They are designed solely to help pay higher education expenses.
Because the purpose of an Education IRA is so different from traditional and Roth IRA’s, the advantages are also unique. Earnings on the funds in an Education IRA will be tax free if they are used to pay for higher education expenses before the designated beneficiary reaches age 30. The earnings are taxable to the designated beneficiary (not the responsible individual or contributor) if they are withdrawn for any other purpose.
An Education IRA encourages a regular savings program for a child’s education. Persons, such as grandparents, can fund this type savings and in many instances, funds can be moved from one family member’s account to another’s.
Call us today at 363-4631 to make an appointment and learn how to start saving for those college expenses!!