| State Street
Investment Center
INVESTMENTS FOR COLLEGE
Accumulating
enough money to send your child to college is a major financial
challenge - one that requires careful planning and discipline. By
doing your financial homework today, you can help improve your child's
educational opportunities tomorrow.
Inflation will also impact the cost of your
child's education. For every $20,000 you would pay for a college
education today, you may have to pay as much as $62,133 in 18 years'
time.* That's why it's important to select growth investments
that have the potential to outpace inflation over time. Based on
your time horizon and tolerance for risk, you and your investment
professional can determine the most effective way to plan for your
child's future.
What is an Education IRA?
Farmers State Bank can help you invest
your money to save up for your child's college education through
the Coverdell (Educational) IRA. An education IRA is an investment
tool created for the purpose of paying for the future cost of a
child's post-secondary education. The plan allows total after-tax
contributions of $2000 per year for each child until they reach
the age of 18. These contributions and their subsequent earnings
are tax-free when withdrawn to pay for qualified education expenses,
such as: tuition, fees, books, supplies, and equipment.
Who can contribute to an Education IRA?
The answer to the question is "almost anyone".
There are 2 key limitations:
- Each child can receive a total of $2000 per
year in contributions from all sources. It does not make a difference
if this is done in a single account or multiple accounts designed
to benefit the same child.
- A person may be limited in the amount of
their contribution if their modified adjusted gross income exceeds
$95,000 for single filers or $150,000 for joint filers. Above
these income levels, the ability to contribute is phased out.
If income exceeds $110,000 for single filers or $160,000 for joint
filers, no contribution is allowed.
The Education IRA does not specify that the
contributor must be a member of the family. With this broad range
of potential contributors, it is possible that more than one person
may want to contribute for the same child. A coordinated effort
should be encouraged to avoid excess contributions.
Can I roll over funds from another IRA?
You can roll over funds from one Education IRA to a new or existing
Education IRA only. The funds, however, must benefit the same child
or an eligible member of the child's family. A rollover contribution
does not affect the $2000 annual contribution limit. Rollovers must
be completed within 60 days of the initial distribution and are
limited to one per 12-month period.
Am I allowed to change the beneficiary?
You may change the designated beneficiary (child). An example
of why someone may wish to change the beneficiary is the current
beneficiary has completed their education and there are funds remaining.
The only stipulation is that the new beneficiary must be an eligible
member of the family.
Who is a member of the family?
There are several possible family members, including: grandparents,
parents, spouses, brothers and sisters, children and their spouses,
and stepchildren and their spouses.
It is important to remember that even with this
extended range of family members, contributions can be made only
for those under the age of 18.
Contact a State Street Investment Center representative
at (888) 879-2183 or email
us for more detailed information on Education IRAs.
Investment Products Offered
 Are Not A Deposit
Are Not FDIC-Insured
Are Not Insured
By Any Federal Government Agency
Are Not Guaranteed
By The Bank
May Go Down
In Value
Securities offered through United Heritage Financial Services,
Inc.
707 E. United Heritage Ct, Meridian, ID 83642
Member NASD, SIPC 1-800-657-6351
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