Educational IRA's

Features:
  • Allows an individual to save money for a child’s higher education on a tax-favored basis.
  • Qualified higher education distributions from an education IRA are penalty free and tax-free.
  • $500.00 per year is maximum that can be deposited on behalf of a child.
  • It allows contributions into Education IRA’s for as many children as desired.
  • There is no requirement that the contributor have earned income.
  • Your Modified Adjusted Gross Income (MAGI) cannot exceed certain limits, same as traditional.
  • Investments are normally tied to CD rates and terms can be adjusted to match the customer’s plans.
  • Funds placed in this account are FDIC insured.

Benefits:
  • It is an easy way for the customer to plan and save for the children’s education.
  • You will earn more money in your account because CD’s are competitively priced and generally pay more than demand deposit accounts.
  • When the beneficiary is ready to take his or her withdrawal for school, there are no taxes due on any of the interest that your money has earned.
  • Distributions are to be during the year in which the education expense occurred
  • Your money is safe because the federal government insures it.

Prospects:
  • Parent’s saving for their children’s educational needs.
  • Customers asking about tax shelters.
  • Current customers with small children needing more than one bank service.

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