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Suppose a family is over the AGI for contributing to an education IRA for one of their children (do I have the name right? I am not sure if it actually is called an education IRA. I am referring to the provision in last year's tax bill that allowed $500 to go into an account for each child; if the money is used to pay college expenses the gains are tax free.)

If the child has a custodial account, can that money be used to fund and education IRA? Assuming, of course, that the child's income does not exceed the AGI for these accounts.

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[[Suppose a family is over the AGI for contributing to an education IRA for one of their children (do
I have the name right? I am not sure if it actually is called an education IRA. I am referring to the
provision in last year's tax bill that allowed $500 to go into an account for each child; if the money is
used to pay college expenses the gains are tax free.)

If the child has a custodial account, can that money be used to fund and education IRA? Assuming,
of course, that the child's income does not exceed the AGI for these accounts. ]]

Interesting...what you are really asking is if a child can fund his/her own educational IRA. I don't see anything in the law that would prohibit this. But you would have an account where the custodian and the beneficiary would be the same person...which is a little unusual on the face of it.

So without some additional research, I really don't know the correct answer. You might want to check with your bank/broker and see what they have to say. They may nix the deal on their end based upon their interpretation of the law. Or you can hold off on this until May when I'll have additional time to do the research.

TMF Taxes
Roy
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Thanks for your thoughts on this matter. I would appreciate anything you might learn about this possible strategy. If I learn anything, I will let you know.
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A thought I picked up from reading this board earlier:

If you're over the AGI limit for an educational IRA but there are living grandparent(s) who aren't, the grandparent could fund the educational IRA with a parent as custodian. Independently, the parent(s) could always benevolently use some part of the $10,000/year/donee exclusion for gift tax in favor of the grandparent.
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