The Future


What is an “Education IRA”?

An Educational IRA, which was renamed in 2002 to Coverdell ESA, allows funds to be withdrawn tax free for educational expenses. It was created as an incentive to help parents provide educational funds to their children. Contributions to this account cannot exceed $2,000 per year, according to the IRS, and are not deductible from the taxpayer’s taxes, but the contributions do grow tax free until distributed. Even the beneficiary will not owe taxes on the distributions, as long as the distributions are less than the qualified education expenses at an eligible institution.


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