The Education IRA gives you a number of good reasons why you should start preparing for the future of the young ones you care about:

Education costs
Education costs have typically risen two to three times the rate of inflation. Since 1980, tuition at both private and public colleges has risen over 100%, while median family income for those parents in the 45-54 age range has only increased by 22% in the same time period.

Unparalleled salaries
A college education is one of the greatest investments you can make. The US Department of Labor notes that in September, 1999, the average annual income of a college graduate was more that 50% greater than that of those with only a high-school diploma.

Accelerated growth
Unlike a regular savings account where you pay taxes on your earnings every year, in an Education IRA earnings grow free of taxes allowing your funds to benefit from compounding of interest and dividends.

Tax-free earnings
All distributions are excluded from gross income if funds are used to cover qualified higher education expenses.

No minimum, $500 maximum
Your savings schedule is flexible with an Education IRA. You can contribute up to $500 annually for each child, or nothing at all. The choice is yours.

Investment decisions
The account holder of the Education IRA is in control of the contribution for a child.

Relative or friend, anyone can contribute
Full contributions are allowed for single filers whose AGI is under $95,000 and for joint filers whose AGI is under $150,000. If you are not eligible to make contributions, someone else can contribute on your behalf.

Annual contributions add up fast
Annual contributions must be made before December 31st of the contribution year.

Coming up Next
Come back for An Investigation of the Uniform Gifts to Minors Act (UGMA)

Meeting Your Goals
Contact Keith Driscoll, Financial Consultant, at Salomon Smith Barney with any questions or comments. Please call 800-336-0156, or email keith.p.driscoll@rssmb.com, for a complimentary consultation on college expense funding.

Salomon Smith Barney does not provide tax or legal advice. Please contact your tax or legal advisor for guidance.

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