Q: How do I set up an Education IRA in Quicken Financial Planner?

A: At this time, there is no specific education Individual Retirement Account (IRA) in Quicken Financial Planner (QFP). The effect of an education IRA on retirement funding will be small, however it can affect overall financial planning. To account for funds invested in an education IRA, use this procedure:

1. Set up an expense in the Living Expense area for the annual dollar contribution to be made for the education IRA. Currently, the maximum legal limit is $500 per year. Be sure to specify the correct start and end dates for this expense item.
2. Set up a Special Income event covering the education IRA fund amounts that will be withdrawn for college expenses. The total amount should account for the contributions made (Living Expense from step 1) plus any interest that will accumulate. A $500 annual contribution over 10 years should reasonably expect to yield perhaps $8000. Specify a zero tax rate for this income, and mark the Use it to pay expenses button.
3. The Special Income event can be set up as either one-time or multiple-year event. This permits either the disbursement of funds over the multi-year college period or in a single lump sum.