An education IRA differs from other IRAs in the following ways:
- No more than $2,000 a year can be contributed to any beneficiary of a single 530 account in any year and contributors are subject to income limits. Modified AGI cannot exceed $110,000 ($220,000 joint filers).
- Contributions aren't deductible and excess contributions are subject to penalty.
- Withdrawals are tax-free to the extent used for qualified education expenses.
- Contributions can't be made after the student reaches age 18, and the account generally must distribute all funds by the student's age 30.
Unlike other plans, 530 accounts may be used for primary and secondary education, including paying for room and board of children in private schools, and for computers and related materials whether or not away from home.
