I want to use distributions from my Individual Retirement Account (IRA) to pay student loans. I am not yet age 59 Â½. Will I owe a tax penalty for taking an early withdrawal from my IRA even if Iâ€™m using the distribution to pay student loans?
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.