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1951twang
February 17, 2025
Question

Penalty exception for education

  • February 17, 2025
  • 1 reply
  • 0 views

Can I get penalty exception for education on early withdrawal of IRA funds if dependent child paid the tuition?

    1 reply

    Hal_Al
    Hal_Al
    Employee
    February 17, 2025

    Yes, as long as your dependent had qualifying expenses in the same year that you took the distribution.  

     

    From Pub 970

    "If your IRA distribution is equal to or less than your AQEE (adjusted qualified educational expenses), you aren't subject to the 10% additional tax."

    "Don't reduce (adjust) the qualified education expenses by amounts paid with funds the student receives as:

    • Payment for services, such as wages;

    • A loan;

    • A gift;

    • An inheritance given to either the student or the individual making the withdrawal; or

    • A withdrawal from personal savings (including savings from a qualified tuition program (QTP))."

     

     

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