Definition:
Education IRA is the former name of the account now known as a Coverdell Education Savings Account (ESA's). The name was changed because the term "IRA," which refers to an "individual retirement account," was confusing to many investors who wanted to save for college.
Education IRA's allow an adult to make a non-deductible contribution to an investment account up to an annual dollar limit per child. If these investments are withdrawn and spent on qualified education expenses, there is no tax on the growth of the investment.
Money held in an Education IRA account must be distributed to the child by age 30 or rolled over to another related family member if not used for college expenses.
Also Known As:
ED IRA, Coverdell, ESA
