IRA to 403B
I need to pay some tuition for my daughter. I have limited funds, but both a ira and a 403 b. I want to roll over some money from my IRA to my 403 b in order to take out a loan to pay for the tuition. I have been making contributions to my IRA for almost 7 years.
Can I do this? Does it make sense? I have no other liquid money available.
thanks
Permalink Submitted by Alan - IRA critic on Mon, 2016-05-02 18:55
If the 403b allows loans, it sounds like you want the IRA rollover to increase the vested plan balance to double the estimated amount of the loan. This would avoid taxes you would owe on an IRA distribution, but of course if you fail to repay the loan, you would end up with a deemed distribution which would be both taxable and subject to penalty. If you took IRA distributions to pay the tuition, you would owe tax but no penalty due to the higher education penalty exception for IRA distributions. The loan solution works well only to the extent of your job security and ability to repay the loan..