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[[ I started EIRA's for my kids last year, contributing the mas $500. Alas this year
my income will be over the limit, and will be unable to contribute.]]

Right...too bad.

[[ I know someone else (say a family member) can make the contribution assuming
they are under the income limit.]]

Correct. I discuss this very issue in the Taxes FAQ area in my post on Ed IRAs. You might want to check it out if you haven't already.

[[ My questions are:

1. Can another person's (say grandma) contribution go into the EIRA account
already established?]] problem there as far as I know. But you'll want to check with the account administrator for a double check. I don't know of any IRS rules that would prohibit this, but the broker may have a different set of rules that you'll want to check on.

[[ 2. Presuming #1 above is true, how exactly would the IRS know (say 10 years
from now) who made the contributions? There won't be any paper trail at that
point that shows Grandpa gave the little dear the check vs me...]]

Good point...which is why I'm looking for a form such as the Form 8606 IRA non-deductible contribution form to track Ed IRA contributions. Even as it stands now, there is no reporting or tracking. Perhaps the IRS will figure that the money is so small, and won't require any specific recordkeeping. But if the Ed IRA moves to $2k (as some have proposed), I would certainly expect some tracking on the tax return.

But, in the meantime, just have grandma and grampa keep the records for the contributions. It may be that the broker will require grandma and pa to open up a separate Ed IRA account...which would take care of the problem. Or grandma and pa can GIFT the money to the child, and the child can make his/her own contribution...which would solve this problem in the future.

Let us know what you find out from your broker.

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