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Formerly called an Education IRA, it is a tax-favored investment vehicle targeted to your child or grandchild's education expenses – kindergarten through graduate school.
In 2002, when the annual contribution limit increased from $500 to $2,000, the Coverdell Education Savings Account became a very attractive education savings vehicle for many people. This is partly due to the fact that many families wish to save money, not only for college, but also for qualified elementary and secondary school expenses.
Qualified expenses include education expenses for elementary through high school, college and graduate school. Expenses include tuition and fees, books, uniforms, tutoring, room and board, transportation and computers.
- The maximum contribution limit is $2,000 per child, per year, until the child reaches age 18.
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- Contributions are not tax-deductible from federal or state income tax, but earnings and distributions accumulate tax-deferred.
- Contributions are phased out for incomes between $95,000 and $110,000 (single filers) or between $190,000 and $220,000 (married filing jointly).
- The money must be used by the time the child reaches age 30 or the earnings will be taxed as ordinary income of the account owner, plus a 10 percent IRS penalty.
- The beneficiary of the plan may be changed to a family member without adverse tax consequences.
- You can contribute to both a Coverdell Account and a Section 529 College Savings plan in the same year, but there may be gift tax implications if you give more than $11,000 per child.
- The account owner may assume control of the account until the student reaches the age of majority.
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The following are the well-respected mutual fund families that manage your investment in a Coverdell Education Savings Account available through Farm Bureau Financial Services.
- American Funds
®
- Dreyfus Premier Funds
- EquiTrust
® Mutual Funds
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| This provision is currently set to expire in 2010. |
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For additional information regarding Farm Bureau's products and services, please contact your local registered representative using the
Agent Locator . |
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IMPORTANT: The information and material contained on this Web site is not an offer to sell or a solicitation to buy any security or any insurance product in any jurisdiction. No security or other insurance product is offered or will be sold in any jurisdiction in which such offer or solicitation purchase or sale would be unlawful under the securities, insurance or other laws of such jurisdiction. Not all products are available in all states. Exclusions, limitations and reductions may apply. This Web site briefly highlights Farm Bureau's insurance policies and their benefits. The contract is contained only in the policy. Farm Bureau products are offered by Farm Bureau agents -- for more information about any Farm Bureau product, please contact your local agent or nearest office using the Agent Locator.
Variable products, subaccounts, mutual funds and municipal fund securities are subject to market risk and possible loss of principal. This and other important information is contained in the prospectus and in the issuer's official statement, which can be obtained from a registered representative and should be read carefully before you invest or pay money. Investors should consider the investment objectives, risks, charges and expenses carefully before investing.
The information contained on this Internet site is not an offer to sell or a solicitation or offer to buy shares in any fund or any series of any fund to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Further, the mutual funds are available for sale by registered representatives of EquiTrust Marketing Services, LLC in the states listed on
www.equitrust.com. The funds are not available for sale outside the United States.
There are various income limits and other requirements necessary to qualify for some of the tax-savings benefits of all IRAs. See your Farm Bureau representative and tax adviser for information regarding your particular situation.
A 6% excess contribution tax is payable for each year that an excess contribution remains in the Coverdell Education Savings Account.
Agent must be a registered representative of EquiTrust Marketing Services, LLC to discuss mutual funds or variable products.
Life insurance and annuity products offered through Farm Bureau Life Insurance Company+/West Des Moines, IA
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