For long term education savings, we encourage you to set up an Individual Retirement Account (IRA). It’s the best way to guarantee a worry-free education.
The Coverdell IRA contributions are non-deductible but the earnings are tax-deferred and distributions are tax-free if used by the account beneficiary (designated student) for qualified expenses.
- College or trade school
- Public or Private elementary and high school
- Books, supplies, equipment, fees, room and board
- The annual contribution limit is $2,000
- Anyone, whether related to the account beneficiary or not, may contribute towards the combined maximum, provided their income is less than $190,000 for married couples filing jointly or $95,000 for individual filers
Points of Interest
- No contributions are allowed after the beneficiary reaches 18 years of age, with the exception of special needs children
- Any distribution not used for qualified education expenses are subject to taxes and a 10% penalty as well
- All contributions must be made by the tax deadline established by the IRS (usually April 15)
- Withdrawals must be made before the designated beneficiary reaches 30 or rolled over the the benefit of another family member
Click here to read the 2015-2016 edition of the IRA Newsletter for valuable information.
Retirement calculators will help project your long-term IRA balances.
Your funds are insured separately up to $250,000 by the NCUA.
For information regarding Traditional IRAs, click here.
For information regarding Roth IRAs, click here.