Contributions for an education IRA and a Qualified State Tuition Program
can now be made in the same tax year for the same beneficiary.
If a donor qualifies to contribute to both an Education IRA and a qualified state tuition program
, he should first fund the $2,000 necessary for the Education IRA, and contribute, any amounts above that to a QTP.
The use of the Section 529 Qualified State Tuition Program
and the Expanded Education IRA should be on every taxpayer's to do list.
Enable residents of this state and other states to benefit from the tax incentive provided for qualified state tuition programs
under the Internal Revenue Act of 1986, as amended; and
A taxpayer cannot contribute to both an Education IRA and a qualified state tuition program
in the same tax year.
Contributions cannot be made to an education IRA on behalf of a designated beneficiary for any tax year in which any contributions are made by anyone to a Qualified State Tuition Program
for the same designated beneficiary.
These qualified higher education expenses include tuition and fees to an eligible educational institution, contributions to a qualified state tuition program
, and contributions to an Education IRA.
529, a qualified state tuition program
is tax-exempt and individuals are allowed to contribute to an account established for the sole purpose of paying the higher education expenses of a designated beneficiary.
IRC section 529(a) states that a qualified state tuition program
will be subject to the Federal income tax on unrelated business income.
102(a)) and savings from a qualified state tuition program
A qualified state tuition program
, as defined in section 529, is one established by a state (or agency or instrumentality thereof) under which a person may (1) purchase tuition credits or certificates for a designated beneficiary that entitle the beneficiary to a waiver of or payment of qualified higher education expenses or (2) contribute to an account established to meet the designated beneficiary's qualified higher education expenses.
Any contribution made to the Education IRA for the year, if a contribution was also made during the year to a qualified state tuition program
(QSTP) for the beneficiary (other than a contribution from an Education IRA to the QSTP); plus