No penalty for early withdrawal of IRA funds to pay higher education expenses

Experienced Tax Accountant – The law lets individuals receive distributions from their IRAs (including Roth IRAs) to pay higher education expenses without incurring the 10% early withdrawal penalty that usually applies to withdrawals from an IRA before age 591/2. (The regular income tax on the distribution still applies.)

The penalty-free withdrawal is available for “qualified higher education expenses,” meaning tuition at a post-secondary educational institution, as well as room and board, fees, books, supplies, and equipment required for enrollment or attendance. Expenses for graduate level courses are also covered.

The expenses can be incurred by the IRA owner, his or her spouse, or any child or grandchild of either spouse. There is no requirement that the child or grandchild be a dependent of the IRA owner.

This provision is just one of several aimed at easing the burden of paying the bills for higher education. If you have any questions about this or any of the other provisions, please do not hesitate to call.

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