IRA Education Withdrawal Year-end for 2024

Submitted by Rob Schmansky on Fri, 2023-12-15 22:47

Client has a bill due for Spring tuition on 1/4. We planned on using IRA funds to pay this. I would like to tell her to take it out in 2023 for tax purposes and because getting it out by 1/4 seems like a hassle.

Can they take the IRA withdrawal and receive the education deduction, send the payment, even if it is for Spring 2024 tuition?



Submitted by Alan - IRA critic on Fri, 2023-12-15 23:22

  • There is no deduction, but a payment for qualified higher education expenses is exempt from the 10% early distribution penalty. The IRA distribution and the payment should be in the same year, so the tuition should be paid this year if the IRA distribution is taken this year. It does not matter that the tuition is for the spring 2024 semester.
  • The penalty exception must be claimed on Form 5329, with exception code 08 on line 2.

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