Converting to Education IRA may be one of the best things you can do when you are aiming to have some money saved up for your child. Converting to education IRA is not at all that difficult, so you might find these advantages motivating enough for you.
It is deducted from your IRA for as much as $2000 a year for your child's higher education expenses and needs. Before 2002, the deduction's maximum is at $500 annually only. Under the category of higher education expenses and needs are tuition fees, books and other things that will be needed for tertiary education.
Tax-Free Deductions from your IRA
The best thing about converting to Education IRA is that when you choose to withdraw the money at any time your child will need it, there will be no 10% deduction on your IRA. This is very convenient since this can be considered a very liquid asset.
Some financial instruments with great returns have humongous tax deductions. With converting to Education IRA, you will be less inclined to lose money or time because of tax and you will find your money used purely for the educational needs in the future.
Complementary to IRA of your spouse
The factors that affect the Education IRA that will be required from you will be complementary to the rates of your spouse and sometimes even the grandparents of your child, the beneficiary. This way, when you are converting to it, you will find that there will be more opportunity for synergy.
Ensured to be exclusive for school expenses
The good thing you can experience when you are converting is that you will find that the money will be used solely for educational purposes only. Some other financial savings receptacles are less strict when it comes to withdrawing the money. No matter what happens, you will find the education of your child secure since it will not be used for other things.
Ample window of time for your child beneficiary
You can start filling up as early as the child is born when you are converting to Education IRA. Your child can avail of the money in the Education IRA when he or she reaches the age of 18. This benefits from it for your child will terminate when the beneficiary reaches the age of 30. Twelve years is considerable an ample window of time with which the beneficiary can finish his or her education.
Flexibility and Openness to Converting to Other Educational Plans
If you think you have made a mistake converting to Education IRA and find that other financial instruments will work best for you, you can convert it at any time without really having to suffer. Sure, there may be some paper work involved but not so much to the point that you will be completely deprived of the right to handle your money effectively.
Converting to Education IRA is a major decision. It will really affect the way your college education savings for your child will be administered, so make sure that you weigh properly the pros and cons of converting to Education IRA. Reduce the need to convert needlessly by really nailing down which of the available methods are going to work for you best.