UK Accounting Glossary
The education IRA is a savings plan for certain expenses of higher education, such as a university or technical college education. It is not an individual retirement account and is not used for retirement. The amount that may be contributed to an Education IRA may change from year to year, due to acts of Congress. Parents and guardians may make contributions to the education IRA of a minor child. Contributions to an Education IRA are not tax-deductible. However, proceeds from an education IRA will not be taxed, provided that they are used for allowable expenses, such as tuition, room and board, books, and fees. The education IRA is now called the Coverdell education savings account. Any money remaining in an education IRA when the beneficiary reaches age 30 must be withdrawn and will be taxed, as well as penalized.
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This glossary post was last updated: 9th February 2020.