roth used for education
Am I correct that if I use my iroth to fund my child’s education and I am under 59 1/2, have had the roth for over 5 years, I will not pay a 10% penalty, but will pay income tax?
Also, are the tax implications the same if it is an inherited roth?
Permalink Submitted by Alan - IRA critic on Sun, 2021-06-20 01:44
Your Roth will not yet be qualified, therefore the ordering rules will determine how much of your distributions are subject to ordinary income taxes. There will be no ordinary income taxes up the amount of distributions from your regular contributions or conversions. There will be no penalty due or recapture taxes due for conversions withdrawn in the first 5 years. The penalty exception only applies to expenses for qualified higher education costs. There is no penalty for distributions from inherited Roth IRAs regardless of the reason for distributions. Inherited Roth IRA distributions are also income tax free if 5 years has passed since the year the decedent made their first contribution. Since a non spouse inherited Roth is subject to a limited distribution period anyway, it would be best to withdraw from it before tapping your own Roth.