Question

We withdrew from an IRA for college expenses. However, the Form 1099-R, Box 7, shows Code 1, reporting no exception applies. Is it possible to get a refund of the amount withheld?

Answer

While an early-distribution penalty does apply when using an IRA to pay student loans, there is no penalty when IRA distributions are used to pay for current educational expenses.

Simply report the early-distribution amount from the IRA used for college expenses on Form 5329. Enter the amount on Line 2 and enter exception number “08.” Any withdrawals in excess of education expenses will be subject to the penalty

Related Topics

Related Resources

Is residential rental property depreciation subject to the AMT depreciation adjustment?

Is rental property depreciation effected by AMT rates? Explore your options and learn more. Get tax answers from H&R Block.

Tax Myths—Busted! | H&R Block

When it comes to making everyday tax decisions, we find that there's a gap between what's true and what's rumored. Let's explore four common tax myths.

If my only income was a lump-sum early withdrawal of my 401(k) plan and SSDI, do I have to file taxes?

Does the early 401k withdrawal penalty apply if it was your only source of income for the year? Learn more and get tax answers at H&R Block.

I needed to take an early distribution from my 401(k), which my 401k plan allows. Since the withdrawal was a hardship 4

Can you receive an exemption if you make an early 401k withdrawal due to hardship? The answer may surprise you. Get tax answers at H&R Block.