| This program is a saving strategy in which contributions
meant for higher education can grow tax-free. As of January 1, 2002,
family members (including parents, grandparents and even friends) are
allowed to contribute up to $2,000 per year into an IRA for each child
under the age of 18. Eligibility requirements restrict joint tax
filers with adjusted gross income of $220,000 or more from participating
($110,000 or more for single filers).
Withdrawals from the Education IRA may also be tax free if the funds
are used to ward the beneficiary's qualified higher educational expenses
(these can include tuition, books, room and board and required
supplies).
Beginning in 2002, Education IRA funds may also be used to pay for
qualified public, private or religious elementary or secondary school
expenses in addition to higher education expenses. Earning are
generally not taxed when taken out to pay for these expenses.
Additional information on all education-related tax benefits is
available in IRS Publication 970. This publication can be viewed
online by visiting the IRS website at http://www.irs.gov
or you can access the publication in Adobe Acrobat format by clicking
here. (Adobe Acrobat Reader, a free download from http://www.adobe.com
is required to view this publication from the IRS) |
