Parents and other interested persons may be able to establish an Education IRA for a child under the age of 18. Contributions to the account are not tax deductible, but the earnings will be tax-free if used for qualified higher education expenses.

• if you and your spouse file a joint tax return and have a joint MAGI of $150,000 or less, or, 
• if you file a single return and your MAGI is $95,000 or less. Those with higher incomes may qualify for reduced contributions. 

You aren’t eligible to contribute if you make a contribution to a qualified state tuition program during the year.

CONTRIBUTIONS AND WITHDRAWALS

Contributions cannot exceed $500 per child per year. If parents, grandparents, and others have each set up an account for the same child, their combined contributions cannot exceed $500 per child per year. 

Withdrawals from an Education IRA are tax-and penalty-free, provided the child’s qualified higher education expenses equal the withdrawals from the Education IRA for that year. Otherwise, any withdrawal of earnings from the account is taxable and a 10% penalty tax may apply.

Funds can be transferred from one child's account to another child in the family.