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?
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