Roth IRA
What It Is
This is a tax-deferred retirement vehicle that can be used
by parents who will be at least 59½ years old when their kids
are in college. You can invest up to $3,000 a year, 4 times
the amount of an Education IRA.
The Benefits
Since you can invest up to $3,000 a year, given enough time,
a Roth IRA has to the potential to grow into a very substantial
sum. You can with draw as much money as you need, provided
the account has been open for at least 4 years and you are
59½ years old.
The Risks
Prior to age 59½, you can tap into the money that you've contributed
(but not the interest or increase in value). As long as it
is used to pay education-related costs, there is no early
withdrawal penalty.
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