EDUCATIONAL IRA CERTIFICATES FAQ

• What is an Education IRA Certificate?

  An Educational IRA Certificate is a form of Educational Savings Account (or Coverdell Education Savings Account) that allows you to make contributions to your child’s future education costs and invest your savings in a certificate savings account. That offers worry-free investing and great returns on your savings.

• Is an educational IRA the same as a 529?

  No, an educational IRA is not the same as a 529 plan, although both do offer tax-advantaged savings.

  Both are designed to save funds to be used for your child or beneficiary's education, including tuition for elementary school, middle school, high school, college, university, or vocational school, there are important differences.

  Because an Educational IRA Certificate is a type of IRA,  contribution limits and tax advantages apply. You and your family can contribute up to a total of $2,000 a year from earned, post-tax income, and then withdrawals are tax-free. However, contributions are limited for higher income earners.

  On the other hand, 529 accounts are generally administered by states or even specific schools and permit much higher limits on contributions and no income restrictions on contributors. However, contributors have little or no say over how contributed funds are invested until they can be used.

• What can the funds from an Educational IRA Certificate be used for?

  Got your eye on classes at Weber State University (Go Wildcats!) or a career focused certificate at Davis Technical College? Educational IRA Certificate funds may be used to pay tuition at many kinds of schools, including private, public, and religious – from elementary school up to college or another type of post-secondary education. You or your child (once they turn 18) can use funds for:

  • Tuition
  • Books
  • Equipment
  • Meals (in some cases)
  • Housing (in some cases)

• Are there any age restrictions on an Educational IRA Certificate?

  There are a number of important age limitations you need to be aware of when opening an Educational IRA Certificate:

  • You need to open the account before your child or beneficiary reaches the age of 18.
  • You and other family members must stop making contributions when your child turns 18.
  • Your child must withdraw all the funds (for eligible educational purposes) by the age of 30.
  • After age 30, your child may need to pay taxes or penalties to withdraw the funds.

• What is a Certificate term and what do I do when it ends?

  Your certificate of deposit’s term is how long you agree to leave your funds untouched.

  • The term may be anything from three months up to 60 months.
  • Longer terms tend to earn higher rates, but some special terms may also earn higher rates.
  • You may be penalized if you withdraw funds before the end of your term.

  The end of your CD term is known as the maturity date. At that time, you may reinvest your Educational IRA Funds into another CD term, or make withdrawals to use for your child's education.

• Do I need to join Wasatch Peaks Credit Union to open this account?

  Yes, you need to join, and becoming a member is easy! You simply need to meet these criteria:

  • You are an immediate family member of an existing member-owner, such as a parent, child, brother, sister, spouse, or surviving spouse.
  • You live, work, worship or attend school in Weber, Morgan, or Davis Counties in Utah, or within a select underserved community located in Box Elder, Salt Lake, Summit, Utah, Tooele, and Juab Counties.
  • You are a member of Trails Foundation of Northern Utah (TFNU.org), a 501(c)(3) NGO that functions as a planner, promoter, constructor, and protector of a network of public paths, trails, and related open spaces for non-motorized use. Not a member of the Trails Foundation Northern Utah? Wasatch Peaks will enroll you at no additional cost to you.