Chip 2004 June/CHIP_CD_2004-06.iso/bonus/buhgal/files/M12USWEB.exe/RCDATA/CABINET/money.cab/msmoney.chm/whyaneducationalirashouldntbeinaretirementaccount.xml

Extensible Markup Language | 2003-06-18 | 2KB | 15 lines

<?xml version="1.0"?>
<?xml-stylesheet type='text/xsl' href='hhPreprocess.xsl'?>
<topic sku="core" tNum="288450" author="sallyh" xmlns="x-schema:hhTopicSchema.xml"><index><title>Learn why a Coverdell ESA (formerly Education IRA) is not a retirement account</title><category>investing</category><klink type="cncpt">Tell me why a Coverdell ESA (formerly Education IRA) is not a retirement account</klink></index>
    <content>
        <!-- This file included Canadian-specific markup -->
        <p>A retirement account in Money (such as a 401(k), a <glossary>Roth IRA</glossary>, or a traditional <glossary>IRA</glossary>) is for holding retirement investments. When a retirement account is opened in Money, it's automatically classified as tax-free or tax-deferred.</p>
        <p>Although the Education IRA had "IRA" in its title, it's not a retirement investment. It's an investment in a child's education. The assets grow tax-free, but the funds can only be used to pay for the child's education expenses. The Education IRA has been renamed the Coverdell Education Savings Account (Coverdell ESA) to make its purpose more clear. The funds in the account must be used for education expenses before the child reaches age 30; otherwise, the account is liquidated and taxes are paid on the proceeds at regular income tax rates.</p>
        <p>You create an investment account in Money for an Education IRA, not a retirement account. Consult your tax advisor for further details.</p>
    </content>
    <footer>
        <include href="CreateAnInvestmentAccount.xml#xpointer(*/index/klink)"/>
        <include href="enterastockormutualfundpurchasesaleorotheractivity.xml#xpointer(*/index/klink)"/>
    </footer>
</topic>