Question

I want to use distributions from my Individual Retirement Account (IRA) to pay student loans. I am not yet age 59 ½. Will I owe a tax penalty for taking an early withdrawal from my IRA even if I’m using the distribution to pay student loans?

Answer

Yes, an early-distribution penalty will apply when using an IRA to pay student loans . You must pay the 10% additional tax on the portion of your IRAs you withdrew to pay student loans. An exception to the penalty applies to IRA distributions used to pay for current educational expenses.

Related Topics

Related Resources

Tax Reform – Section 179 Deduction: Election to Expense Business Property

Deducting property expenses under Section 179 after Tax Reform? Learn why tax reform means new deduction rules for business owners and how the changes may affect you.

IRS Direct Deposit

IRS direct deposit is a convenient way to receive your tax refund. Find out the benefits of using direct deposit and how you can set it up for your tax return.

Top IRS Audit Triggers: Nine Tax Mistakes to Avoid

What triggers the IRS to audit a tax return? Learn how common tax mistakes and errors can be a red flag and affect your chances of being audited by the IRS.

IRS Penalty Abatement Request Letter

Get the facts from the experts at H&R Block about the specific items you should include in an IRS penalty abatement request letter.