Question

ROTH IRA for education- Tax liability?

Forum|Forum|7 years ago
June 5, 2019
1 reply
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Held Roth IRA for more than 5 years. under 59. Will have to use the money to pay for child's college education. Are the earnings taxed? Do I have the check sent directly to college? How do I know in advance how much is my tax liability?

macuser_22

Employee

First, your own prior contributions can always be withdrawn tax and penalty free. Earnings can be withdrawn penalty free if used to pay for higher education.

See IRS Pub 590B.

https://www.irs.gov/publications/p590b/ch01.html#en_US_2016_publink1000230896

Higher education expenses. Even if you are under age 59½, if you paid expenses for higher education during the year, part (or all) of any distribution may not be subject to the 10% additional tax. The part not subject to the tax is generally the amount that is not more than the qualified higher education expenses (defined next) for the year for education furnished at an eligible educational institution (defined below). The education must be for you, your spouse, or the children or grandchildren of you or your spouse.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Hal_Al

Employee

Yes, the earnings are still taxed. Education is only an exception to the 10% early withdrawal penalty.
There is no requirement to send the money directly to the school. I suspect the IRA custodian would not be willing to even do that

M

marcandre123

Just to double-check, as I plan to debit my Roth IRA account to pay for graduate school fees (and therefore avoid taking additional loans).

I have not held my Roth IRA for more than 5 years, and am currently 28 years old. If I debit my Roth IRA account to pay for graduate school fees, do I have to pay the 10% withdrawal? In addition, does my distribution get taxed as regular income?

Thank you for your help.