You can withdraw money early from an IRA to pay for higher education.
The Internal Revenue Service doesn't want you to withdraw money from your IRA before you hit 59½. If you do, the IRS will usually charge you both taxes and an early-withdrawal penalty of 10 percent on the money you took out. There are exceptions, though. One of the most important is for higher education.
Higher Education
You won't face costly penalties when withdrawing for higher education.
You are allowed to withdraw money from your IRA at any time to pay for higher education. The IRS won't charge you any penalties or taxes.
Allowable Costs
You can pay for textbooks too.
The IRS is flexible when it comes to higher education costs. You can use your IRA withdrawal to pay for tuition as well as fees, books, equipment or supplies.
Not Just Yourself
You can use your IRA funds for your children's higher education.
The IRS also allows you to spend your IRA withdrawal on higher education costs for your children, grandchildren and spouse.
Accreditation
There is one requirement: You must spend your IRA funds on a school that has received full accreditation. Check for a list of fully accredited schools on the IRS's website (www.irs.gov).
Ask an Expert
Talking to a tax professional can ease any concerns.
If you want to make absolutely sure your IRA withdrawal will not result in a penalty, ask a tax professional or certified public accountant.
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