Roth IRAs were built for retirement. They're not ideal for college savings, but the tax rules include provisions that can help education savers in a pinch.

If you can afford to save more than the $2,000 annual maximum for the Coverdell ESA, consider putting additional funds in a Roth IRA, where your contributions might serve a double purpose. The Roth allows you to take out your contributions at any time, tax- and penalty-free, so you can tap those contributions for college expenses if you need to or let them ride for retirement if you don't.

Here's how: A husband and wife can each contribute up to $4,000 annually to a Roth. (The contribution will increase to $5,000 for 2008.) Say the couple starts out on this path with a newborn. They could accumulate $174,000 in contributions over 18 years.

That sum could then be tapped for college bills or left to continue growing for retirement. The earnings on those contributions (another $208,000 in a pair of fully funded accounts that grow at 8% per year) could be withdrawn penalty-free if used to pay college bills (but tax would still be due if the parents are under age 59½). Or earnings could continue to grow inside the accounts and be withdrawn tax-free by the couple when they retire.

Tax Credits for College Expenses

MORE: Kiplinger.com | The Basics of Money | Getting Started

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