How does an education IRA differ from other IRAs?
A. An education IRA differs from other IRAs in the following ways: • No more than $500 a year can be contributed to any single education IRA in any year, and contributors are subject to income limits. • Contributions aren’t deductible and excess contributions are subject to penalty. • Education IRA contributions aren’t based on earnings for personal services; neither contributor nor beneficiary need be employed of self-employed. • Withdrawals are tax-free to the extent used for qualified education expenses. • Contributions can’t be made to a student’s education IRA after the student reaches age 18, and the IRA must distribute all funds by the student’s age 30.
