ElectroFile Tax Software Tax Info Newsletter            Dated: 07/16/2001

Education IRA planning should start now!

There are many generous provisions relating to qualified plans in the new Economic Growth and Tax Relief Reconciliation Act of 2001 tax law.

Financial planners are excitedly talking about one of the provisions of the new tax law. That is the changes to the Education IRA.

The allowable contribution goes up from the present $500 to $2,000 per year January 01, 2002.

Your employer will be allowed to contribute to one on your behalf And better yet, the money deposited will not be taxed to you. So, employers can now provide a non-taxed benefit to you.

But most interesting, is the provision that allows the money in the Educational IRA to be used towards private school costs K-12. This includes the costs of tutors, books, uniforms, educational software, etc. In other words, all the things you are spending on your children's education out of your pocket now.

All of the provisions affecting Educational IRA's take affect January 1, 2002. After that, you may contribute to an Education IRA up to the due date of your individual income tax return, not including extensions (April 15th). Prior law required the contribution to be made during the calendar year.

For more information, eMail: taxinfo@electrofile.com

All information provided is general in nature and intended to create awareness, not to address the specific circumstances or concerns of any individual or entity. Although we try to provide correct and timely information, we cannot guarantee the accuracy of any information or that such information will continue to be accurate in the future due to the changing nature of the tax laws. Before acting on any of the information provided here, you should consult with a professional advisor who knows all of the unique facts and circumstances pertinent to your particular situation.