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Taxpayers may make withdrawals from a Roth IRA to pay the
qualified higher education expenses for the taxpayer, the taxpayer's
spouse, or the child or grandchild of the taxpayer or taxpayer's
spouse at an eligible educational institution.
If the taxpayer is younger than age 59½:
- The amount withdrawn will not be subject to the 10% early
withdrawal tax as long as the withdrawal is less than the qualified
higher education expenses for the calendar year.
- The account holder will have to pay taxes on any earnings
that are withdrawn. No taxes are due on contribution amounts that
are withdrawn since those funds were taxed prior to the
contribution.
If the taxpayer is older than age 59½:
- Withdrawals are not subject to an early withdrawal tax.
- The amount withdrawn is tax-free if the IRA is at least
five years old, regardless of the intended use of the funds.
Click
here for details from the Internal Revenue Service website about
using Roth IRAs to pay for education expenses. |
