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Finance Dictionary and Glossary of Investment Terms
Education IRA
Definition 1.
The name for a tax-deferred investment vehicle, set up on or after January 1, 1998, which has now been replaced by the Coverdell Education Savings Account. Such an account may contain funds to be applied to future education-related expenses. The name is misleading, as an Education IRA is not actually an IRA and is not related to retirement in any way. Contributions are not tax-deductible but all deposits and earnings can be withdrawn without additional penalties or taxes.
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Definition 2.
A savings plan for higher education. Parents or guardians are allowed to make nondeductible contributions to an education IRA for a child under 18.
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Definition 3.
A type of individual retirement account enabling the contribution of up to $500 per year for each child up to the age of 18 by the parents in the family.
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