How would you like to save for your child's education, have your account grow tax-deferred and withdraw funds tax-free? It almost sounds too good to be true but can do just that. It's called a Coverdell Education Savings Account and you can open one at Stratton Mutual Funds.

Formerly known as the Education IRA, the Coverdell Education Savings Account is a very attractive college savings vehicle. What's more, the account can be used to save and pay for more than college expenses: the account can also be used to pay for elementary and secondary school expenses, including the purchase of a computer system, educational software and Internet access for the child.

What Are the Benefits?

• Tax savings. While you cannot deduct your contribution, earnings in the account grow tax-deferred and you can withdraw funds on a tax-free basis if they are used for qualified expenses such as tuition, books and room and board.
  
  Funds in a Coverdell Education Savings Account must be used by the time the child turns 30. If not, they can be transferred to another family member's Coverdell Education Savings Account. Any remaining funds will be taxed and subject to a 10% penalty upon distribution.
• Convenience. Any child under age 18 is eligible to have a Coverdell Education Savings Account. You don't have to be related to the beneficiary to contribute to the account. Entities such as corporations, charitable organizations, and foundations can contribute to a student's account.
• Flexibility. Changes in the tax laws in 2001 increased the amount that can be contributed per child per year. The maximum contribution is $2,000 per year (up from $500), and distributions may be used for qualified primary and secondary education expenses as well as for higher education expenses.
  
  Individual taxpayers with modified adjusted gross incomes under $95,000 and married taxpayers with incomes under $190,000 can make the maximum allowable annual contribution to the account. The allowable contribution is gradually reduced at higher levels of income.

How Do You Get Started?
Call the Stratton Funds today at 800-634-5726 and we'll send you everything you need to open a Coverdell Education Savings Account.