Mar 25

My father is trying to pay for my sisters education.I know that we can withdraw money for college from Roth IRA.Is it the same for the Traditional?Any references are more than welcome.Thanks a lot!


4 comments so far...

  • wisegirl74 Said on March 25th, 2010 at 11:08 pm:

    It is always good to talk to the bank where you hold your IRA, but yes you can withraw some money without penalty from it for Education purposes or to purchase your first home. For a traditional IRA you will be taxed on those dollars at the rate you earn today, so make sure you are making the right move when doing so.

  • walt17jr Said on March 25th, 2010 at 11:26 pm:

    The answer is probably yes. IRS publication 970, chapter 9 will give you the details and eligibility. You need the Adobe reader to view it.

    http://www.irs.gov/pub/irs-pdf/p970.pdf

  • doreen k Said on March 25th, 2010 at 11:36 pm:

    Go to http://www.irs.gov and search for Publication 590, Individual Retirement Arrangements, to confirm the information I’m sharing with you. The IRS server is really overloaded right now, so you might have to be persistent in trying to access the information.

    You can withdraw from a traditional IRA to pay for higher education expenses without paying the normal 10% tax penalty; however, the amount withdrawn may be subject to regular income tax.

    If your father was able to take a tax deduction at the times he made his contributions, then the amounts withdrawn have not been taxed previously and would be subject to tax in the year he takes the distribution. If your father made non-deductible contributions to his traditional IRA, then only the portion of the withdrawal that represented the earnings would be subject to income tax.

  • Todd Said on May 2nd, 2010 at 11:00 am:

    Is it allowed to use traditional ira funds to purchase a dividend paying whole life policy without penalties and fees?

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