account (DJI webcenter, what’s hot, 2000). Another important fact about the Education IRA is that only cash, checks, or money orders are allowed to purchase IRAs. You are not allowed to make contributions with securities such as shares of stocks or mutual funds. A child may have any number of Education IRAs, but in any taxable year the total amount of contributions to all Education IRAs that the child is a beneficiary of can not exceed the amount of $500. The “qualified higher education expenses” means expenses for tuition, fees, books, supplies, and equipment required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. Qualified higher education expenses may also include room and board (generally the school’s posted room and board charge, or $2,500 per year for students living off-campus and not at home) if the designated beneficiary is at least half-time student at an eligible educational institution (DJI webcenter, what’s hot, 2000). To find out if a certain college is considered an eligible education, then you may check section 481 of the higher education act of 1965. Most of the eligible educations include major universities and postsecondary educational institutions. With the Education IRA if the child or student dies before all assets of the Education IRA were withdrawn, the balance in the Education IRA may be distributed to any other beneficiary (person or estate) that is named in the plan document. If the named primary of contingent beneficiary is a qualified family member, the beneficiary may elect to treat the Education IRA as his or her own. Also with the Education IRA if the child/beneficiary finishes their higher education and there is assets remaining in the account, then there are two options which they can choose from. The first option is to withdrawal the remaining amount, but it will be subject to income tax and an additional 1...
