Maximize Your Education IRA: A Guide to Smart Savings

The educational IRA is a tax-advantaged savings account that allows you to save money for a child's education expenses. Using the funds from your education IRA wisely is important as the cost of education is high. Here are the basics of using the funds from your education IRA. 

Education IRAs

The education IRA is also referred to as the Coverdell ESA. With this type of plan, you can contribute tax-free dollars to an investment account. You can put the money in and then withdraw it for their education expenses without incurring any tax liability.

Expenses

With an education IRA, there are a number of expenses that you can use the funds for. Unlike other types of education savings plans, like the College 529 Savings Plan, you can use it for virtually any education expense. One of the big differences with this type of plan is that you can utilize it for any level of education. For example, if you want to send your children to private school, you can help pay for it with an education IRA. You can also use the money for any other education-related expenses such as paying for books, room and board, transportation, and computers.