Let's assume that you would like to begin saving for your children's education fund. At the end of each year, for the next 8 years, you will contribute $2,000 into a Coverdell Education Savings Account (Education IRA), using your after-tax dollars. The money grows tax-free, and neither the contribution nor the interest is taxed when you make a withdrawal, as long as you use it for education purposes.
By the end of 17 years, your Education IRA will have accumulated to just over $86,000. Contrast this with your fully taxable non-IRA account which would have grown to only $50,000. That is a $36,000 difference!
Today, the average 4-year cost of education at a public college in the country is around $38,000. In 18 years it is projected to be close to $86,000. Costs for private education are even higher.
This example illustrates that, by funding your child's education using an Education IRA earning 14% with after-tax contributions of $2,000 in each of the first 8 years of your child's life, you can put an extra $36,000 into your child's future rather than Uncle Sam's pocket!
There would be enough in the IRA account to pay for the entire projected 4-year education costs.
Now, when your child begins their college education, as you draw from the account each year to pay for expenses, and re-invest the remaining funds, at the end of your child's 4th year of college, an extra $27,000 would remain in the IRA that can be transferred to another child's account.
If you have a fully taxable Non-IRA account, you'd have to come out of pocket in your child's 3rd year of college because the account didn't have enough to cover the entire education cost.
By using a Tax-Free Education IRA account, this allows the contributions to accumulate at a much fast rate than the fully taxable investment vehicle.
Brian Gray is a full time real estate investor and web developer. You can visit his website to learn how to earn 14% per year in your ira. It is a very how to earn 14% per year in your ira.
Beecher limo rentals ..Someone once remarked, "Next to being shot at and missed,... Read More
Yes, the tax season is upon with the first filing... Read More
Running a home based business reaps many wonderful tax deductions... Read More
Once a year Canadian taxpayers are required, by law, to... Read More
It may not be high on the list of wedding... Read More
In a past article I relayed the plight of the... Read More
Background issues of access to recordsTo assess the records at... Read More
Following is a reproduction of the IRS's rules and requirements... Read More
Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More
Most people trying to make a crust online (or offline... Read More
So, you were pleasantly surprised to learn that you are... Read More
While accountants are reaching for aspirin, millions of Americans are... Read More
Let's assume that you would like to begin saving for... Read More
"Depreciation." For business owners, this word is the one most... Read More
As a small business owner, it's wise to familiarize yourself... Read More
Marketing is a necessary expense in running practically any business... Read More
In the latest Star Wars episode, the evil empire executes... Read More
The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More
If you are a Small Business Owner or Self-Employed Person,... Read More
Tilting the Tax Laws in Your Favor.In order to accelerate... Read More
It's a major fear for most Americans: A notice from... Read More
Assume a buyer in Pakistan downloads software from the Internet... Read More
The Internal Revenue Service is reporting that the difference between... Read More
Your days as an entrepreneur and businessperson are consumed with... Read More
Someone once said, 'the best way to calculate your taxes... Read More
Bridgeview limo Chicago ..Running a home based business reaps many wonderful tax deductions... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
Assume a buyer in Pakistan downloads software from the Internet... Read More
Deduction of Refinance PointsAny points that you pay in the... Read More
In the latest Star Wars episode, the evil empire executes... Read More
As a small business owner, it's wise to familiarize yourself... Read More
How about a Tax Tip?As we all know Taxes are... Read More
The United States is a nation of entrepreneurs. There are... Read More
Millions of people file tax return extensions every year. The... Read More
If you are environmentally conscious and purchase a 2005 Ford... Read More
Deducting Your Auto ExpensesAuto deductions are a very complex topic.... Read More
The IRS has obtained civil injunctions against more than 100... Read More
Choosing the right tax preparer for your business is a... Read More
As your business grows, you are going to need help.... Read More
On June 3, 2005, the IRS released guidance on charitable... Read More
While there are many equally valid reasons to incorporate, saving... Read More
If you paid someone to care for a child so... Read More
The 100 year old investment-banking firm of... Read More
The federal tax code is complex. This complexity generally arises... Read More
Have you been thinking about incorporating your small business or... Read More
If your like many, you don't always understand what people... Read More
Whether helping the kids with a down payment on their... Read More
So, you were pleasantly surprised to learn that you are... Read More
Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More
Haven't done your taxes yet? No problem. Now there is... Read More
Tax |