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Subject:  Education IRA Date:  4/18/2000  9:11 AM
Author:  hzengmar Number:  34682 of 127745

I contributed $500 to my son's Edu-IRA for year 2000. We just realized a capital gain in March which would put us over the $160000 AGI limit, assuming that we are luck enough to avoid significant capital loss later of the year. So I might have to withdraw the $500 and its earnings before April 15, 2001 from my son's Edu-IRA account.

My son is only three years old and does not need to file a return. Do I have to include the earnings of the $500 as our income on our joint return and pay capital gain tax on it or I don't have to report it at all? This is question #1.

Question #2: my son's grandparents have expressed interest in contributing to his Edu-IRA previously and their income is below the AGI limit. Are they allowed to contribute $500 to my son's Edu-IRA even though we could not to? If so, do they have to contribute to a seperate Edu-IRA account of his?

In practice, I could have given the grandparents $500 and ask them to contribute instead of me. Is this legal?

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