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Education Savings Account |
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Coverdell Education
Savings Account
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Nizari Credit Union
College Savings Account |
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Income Limits |
Contribution is phased out if
income is $95,000 - $110,000 if single, or $190,000 - $220,000 if married
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No income limits for
contribution
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Contribution Limits
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$2000 per year per beneficiary |
$6000 per year per beneficiary |
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Control
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Beneficiary may assume control at age 18 or 21 in most states
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Account is controlled by custodian
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Uses
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Education expenses for kindergarten through high school, college and graduate school. Expenses include tuition, books, and lodging
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Education expenses for college and graduate school. Expenses include tuition, books, and lodging
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Ability To Change Beneficiary
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Yes |
Yes |
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Penalties on
Non-Qualified Withdrawals
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10% IRS Penalty on earnings |
10% Penalty on earnings |
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Earnings
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1/2 % over declared dividend |
1/2 % over declared dividend |
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Insurance
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NCUSIF insured |
NCUSIF insured |
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Tax Treatment |
Tax exempt. In case of withdrawals
for non-educational purpose,
all earnings will be taxed in the
year it is withdrawn |
Earnings subject to tax every year. Custodian will receive 1099-INT each year.
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There are two things to keep in mind for members wanting to take advantage of the above two education savings program offered by Nizari Progressive Federal Credit Union:
- Coverdell ESA may not be sufficient for all members since there is limit of $2,000 per year per beneficiary, imposed by IRS regulation.
- Nizari College Savings account provides additional means of saving and provides a better interest rate than most low risk money market accounts. We strongly encourage saving on a regular monthly basis rather than an annual lump sum of $6,000.
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