Roth IRA or Education IRA??

[Guest lstolty]

I must be missing something. Why use an Education IRA when a Roth still allows for tax free distributions for higher education?

From what I understand, you are better investing in a Roth for higher education because you have higher contribution limits and you are still allowed to take the Hope Tax Credit.

Do I have this straight? I need to start saving for my childrens' education, and I am looking at the Roth. Am I way off base on this one?

Thanks,

[BPickerCPA]

Roth IRAs do NOT allow tax free withdrawals for education. They allow PENALTY free (10% early withdrawal excise tax) withdrawals. You would still pay income tax on any earnings withdrawn.

[txdd]

Assuming you meet eligibility, you and your spouse can establish Roth IRA's for yourselves AND educational IRA's for your children.

You cannot, however, establish Roth IRA's for your children unless they have earned income.