Education Accounts (aka Coverdell IRA’s):
Unlike traditional and Roth IRA’s, Coverdell IRA’s are not tools for retirement savings. They are designed solely to help pay higher education expenses.
- Earnings on the funds in a Coverdell IRA will be tax free (if used to pay for higher education expenses before the designated beneficiary reaches age 30)
- Earnings are taxable to the designated beneficiary (not the responsible individual or contributor) if withdrawn for other purposes.
- Encourages a savings program for a child’s education
- Persons such as grandparents, aunts, uncles, or other family members can fund the IRA
- Start-up fee $10.00
- Annual maintenance fee $10.00
- Close Account fee $10.00