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R
rudolfolt63
April 15, 2024
Question

I do not qualify for educational expenses because IRS stated I made too much money. But I made too much money because I cashed out my 401K to pay for college expenses.

  • April 15, 2024
  • 1 reply
  • 0 views
I will cash out 401K again for next year's college expenses and for the remainder of my son's undergraduate years.

1 reply

B
Bsch4477
Employee
April 15, 2024

That’s the reality of tax law. 

Hal_Al
Hal_Al
Employee
April 15, 2024

More bad news: Taking money out of a 401k, before age 59.5, is subject to a 10% penalty.   401(k) withdrawals for educational expenses do not qualify for an early withdrawal penalty waiver, but IRA withdrawals do.

 

Consider taking a loan form your 401k, instead.

Rolling over the 401k to an IRA (not Roth) first would avoid the penalty, but you'd still have the too much income problem.  

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