Who can
contribute? |
How much
can I contribute? |
Who can make
deductible contributions? |
What are the tax advantages? |
When can I withdraw
without restrictions? |
$Anyone
who has income from compensation (or who is filing jointly with
a spouse who earns compensation) with the following MAGI:*
--Up to $95,000 (single filers)
--Up to $150,000 (joint filers)
$Reduced contributions allowed
for higher incomes (up to $110,000 for single filers and $160,000
for joint filers) |
$$3,000
for 2002
through 2004
$Higher limit if age 50 or older
$Cannot exceed
compensation
$Reduces contributions
that can be made to traditional IRAs |
$No
one can deduct contributions |
$Regular
contributions can be withdrawn tax- and penalty-free
at any time
$After the account has been open
five tax years, earnings can be withdrawn tax- and penalty-free
for any of these reasons: age 59½, disability, death,
or a first-time home purchase** |
$Earnings
are tax-free if account is open for five tax years and withdrawn
for a
qualified reason (age 59½, disability, death, or a first-time
home purchase**)
$Not required to start
withdrawals at age 70½ |
| $Anyone
under age 70½ who has income from compensation (or who
is filing jointly with a spouse who earns compensation) |
$$3,000
for 2002
through 2004
$Higher limit if
age 50 or older
$Cannot exceed
compensation
$Reduces contributions
that can be made to Roth IRAs |
$Fully-deductible
contributions:
- Single individuals not active in employer retirement plans
(regardless of income)
- Single individuals active in employer retirement plans with
MAGI* of less than $34,000
- Married couples with neither spouse active in an employer retirement
plan (regardless of income)
- Married individuals active in employer retirement plans with
joint tax returns showing MAGI* of less than $54,000
- Married individuals not active in employer retirement plans
with spouses who are, as long as MAGI* is $150,000 or less
$Individuals with incomes exceeding
the above limits may be able to deduct an amount that is less
than the maximum amount that can be contributed |
$Earnings
grow tax-deferred until withdrawn
$Contributions may be tax-deductible |
$Withdraw
penalty-free for any of the following reasons:
$Qualified higher-education
expenses
$First-time home purchase**
$Age 59½
$Disability
$Qualifying medical expenses exceeding
7.5% of adjusted
gross income
$Payment to beneficiaries upon
the owner’s death
$Payment of health insurance premiums
while unemployed
for 12 weeks or longer |
$Anyone
who has MAGI*
- Single filer: up to $95,000
- Joint income for filers: up to $190,00
$Some people with higher MAGI may
be able to make smaller contributions
$Contributions not allowed after
the beneficiary reaches age 18 (except for special-needs beneficiaries) |
$$2,000
per child
$Limit applies to all Coverdell
Education Savings Accounts (ESA) for the same child |
$No
one can deduct contributions |
$Withdrawals
for certain qualified education expenses are tax-free
$Special-needs beneficiaries can
withdraw funds tax-free to pay for qualified education expenses
at any age
$Qualified education expenses may
include tuition, fees, books, computer equipment and technology
required for elementary, secondary and postsecondary education
$A beneficiary may receive tax-free
distributions from a Coverdell ESA in the same year he or she
claims the Lifetime Learning or HOPE |
$Withdrawals are tax- and penalty-free
only for qualified education expenses (earnings are subject to
tax and penalty for most other withdrawals)
$Funds can be transferred from
one child’s account to an account for another child in the
family
* MAGI - modified adjusted
gross income from the federal tax form
** Lifetime limit for exemption on first-time
home purchase is $10,000
*** Formerly known as theE ducation IRA
|
