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EDUCATION IRA
An Education IRA is a special type of savings account with the sole purpose of helping to pay the higher-education expenses of the child named on the account, called the designated beneficiary.
The person who opens the Education IRA and makes the first contribution is called the grantor (for trust accounts) or the depositor (for custodial accounts). This person can be anyone who meets the income requirements--a parent, grandparent, aunt, uncle, or another "interested party."
The designated beneficiary's mother, father, or legal guardian must be named as the Responsible Individual of the Education IRA, and will control the account.
The account must be established before the designated beneficiary's 18th birthday.
Earnings will accumulate tax-free and withdrawals will be tax-free if used for vocational, undergraduate or graduate education expenses for the designated beneficiary by the time he or she reaches age 30.
Contributions to an Education IRA are nondeductible.
Total contributions to Education IRAs for one child cannot exceed $500 per year, regardless of who makes the contribution.
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