Can I Use a Roth IRA for College Expenses?
You can withdraw money from a Roth individual retirement account at any time, for any reason, including college expenses. You might owe taxes on the withdrawal, but most likely the early-withdrawal penalty would be waived.
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Function
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"Early withdrawals" are distributions from Roth IRAs before the account has been open for five years and the account-holder is at least 59 1/2. Early withdrawals of contributions from Roth IRAs alwaysare tax-free and penalty-free.
Early withdrawals of earnings are typically subject to taxes and early-withdrawal penalties. However, the IRS waives the penalties if the money goes toward qualified college expenses.
Identification
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Qualified college expenses include tuition, books, fees and supplies at colleges, universities and vocational schools. In addition, if you enroll at least half-time, room and board counts as a qualified education expense.
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Reporting
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When you take an early withdrawal of earnings for college expenses, you must file Form 5329 and enter code "08" to show how the money was used. You will be exempt from the early-withdrawal penalty, but not from the income taxes.
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