Who Can Contribute to an Education IRA? Any individual (including the designated beneficiary) cancontribute to a child's education IRA if the individual's modifiedadjusted gross income (discussed later) for the tax year is less than$110,000 ($160,000 for married taxpayers filing jointly). Contributions can be made to one or several education IRAs for thesame child provided that the total contributions are not more than thecontribution limit (defined later) for a tax year. Qualified state tuition program.No contributions can be made to an education IRA on behalf of abeneficiary if any amount is contributed during the tax year to aqualified state tuition program on behalf of the same beneficiary. Formore information on state tuition programs, see Publication 970. Contribution Limits There are two yearly limits, one on the total amount that can becontributed for each designated beneficiary (child) and one on theamount that any individual can contribute for any one child for ayear. Limit for Each Child The total of all contributions to all education IRAs set up for thebenefit of any one designated beneficiary (child) cannot be more than$500 for a tax year. This includes contributions (other thanrollovers) to all the child's education IRAs from all sources.Rollovers are discussed at hotels in AlbufeiraCan Education IRA Assets Be Moved?,later. Limit for Each Contributor You can contribute up to $500 for each child for any tax year. Thisis the most you can contribute for the benefit of any one child forany year, regardless of the number of education IRAs set up for thechild. This limit may be reduced as explained next. Antwerp HotelsReduced limit for certain contributors.If your modified adjusted gross income (defined later)is between $95,000 and $110,000 (between $150,000 and $160,000 iffiling a joint return), your $500 limit for each child is graduallyreduced (see ERROR MSGFiguring the limit, next). If your modifiedadjusted income is $110,000 or more ($160,000 or more if filing ajoint return), you cannot contribute to anyone's education IRA. Figuring the limit.To figure the limit on the amount you can contribute for eachchild, multiply $500 by a fraction. The numerator (top number) is yourmodified adjusted gross income (defined later) minus $95,000 ($150,000if filing a joint return). The denominator (bottom number) is $15,000($10,000 if filing a joint return). Subtract the result from $500.This is the maximum amount you can contribute for each child. Example.Jordan, a single individual, had modified adjusted gross income of$96,500 for the year. For Jordan, the maximum contribution foreach child is reduced to $450, figured as follows. $96,500 - $95,000 = $1,500 $1,500 $15,000 = 10% 10% $500 = $50 $500 - $50 = $450 Modified adjusted gross income.Your modified adjusted gross income for the purpose of determiningthe contribution limit is the adjusted gross income shown on yourreturn, increased by the following exclusions from your income. Foreign earned income of U.S. citizens or residents livingabroad. Housing costs of U.S. citizens or residents livingabroad. Income from sources within: Puerto Rico, Guam, American Samoa, or The Northern Mariana Islands. Additional Tax on Excess Contributions A 6% excise tax applies each year to excess contributions that arein an education IRA at the end of the year. Excess contributions arethe total of the following three amounts. Contributions to any child's education IRAs for the yearthat are more than $500 (or, if less, the total of each contributor'slimit for the year, as discussed earlier). All contributions to a child's education IRA for the year ifany amount is also contributed during the year to a qualified statetuition program on behalf of the same child. However, amountswithdrawn from the education IRA to be contributed to the qualifiedstate tuition program are not excess contributions. accommodation in Frankfurt am MainExcess contributions for the preceding year, reduced by thetotal of the following: Withdrawals (other than those rolled over as discussedlater) made during the year, and The contribution limit for the current year minus the amountcontributed for the current year. Exceptions.The excise tax does not apply if the excess contributions (and anyearnings on them) are withdrawn before the due date of thebeneficiary's tax return for the year (including extensions). If thebeneficiary does not have to file a return for the year, the tax doesnot apply if the excess contributions (and the earnings on them) arewithdrawn by April 15 of the year following the year the contributionsare made. The withdrawn earnings must be included in the beneficiary'sincome for the year in which the excess contribution is made. The excise tax also does not apply to any rollover contribution. When Contributions Can Be Made You can make contributions to an education IRA for a year at anytime during the year. The last day you can make a contribution for1999 is December 31, 1999. Other Contribution Rules You can contribute only cash to an education IRA. You cannotcontribute to an education IRA after the beneficiary reaches age 18.