IRA withdrawals for education
CLient is 45 and we rolled over part of his 401k at work to an IRA 10 yrs ago. His kid is going to college. Can he tap into his IRA for his kids college without penalty?
and if so how much?
Thank you,
Douglas
CLient is 45 and we rolled over part of his 401k at work to an IRA 10 yrs ago. His kid is going to college. Can he tap into his IRA for his kids college without penalty?
and if so how much?
Thank you,
Douglas
Permalink Submitted by Alan Spross on Fri, 2008-04-11 04:52
Yes, there is no dollar limit, but the IRA distribution and the payment of qualified higher education expenses must be in the same year. If the kid is at least a half time student, room and board are included as qualified expenses.
Careful coordination must be made with various financial aid or other reimbursement sources per Pub 590, p 54 in order to determine which sources are subject to the waiver and which are not.
Permalink Submitted by [email protected] on Fri, 2008-04-11 15:30
does the money out of the IRA have to be made out to the college or can it be made out to the IRA owner?
if there a form the IRA owner has to sign so the IRS knows that it is for college so they don’;t hit them with the 10% penalty?
The money taken out of the IRA still goes to the bottom line income tax, for tax purposes, yes (meaning its not tax free, they pay taxes on the money but not the 10% penalty)?
Thank you,
Doug