If I take a Roth IRA withdrawal early to pay for education expenses, will I be subject to a retirement-plan early-distribution penalty?
You won’t have to pay the early-distribution penalty 10% additional tax on your Roth IRA withdrawal if all of these apply:
- The amounts withdrawn aren’t more than your, your spouse’s, your child’s and/or your grandchild’s qualified higher-education expenses paid during 2018. Your child or grandchild doesn’t need to be your dependent for the withdrawal to qualify for the exclusion.
- The amounts withdrawn are either:
- From your original Roth IRA contributions
- Not from your original Roth IRA contributions, but it’s been more than five years since you first contributed or converted money into a Roth IRA
These are qualified higher education expenses:
- Tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution
- Expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.
Also, if the individual is at least a half-time student, room and board are qualified higher education expenses.
An eligible educational institution is any of these that can participate in the student aid program administered by the U.S. Department of Education:
- Vocational school
- Other post-secondary educational institution
The educational institution should be able to tell you if it’s eligible.
Do you know how to read a credit report? H&R Block tax pros have prepared the top 5 items you should look for when conducting a credit report review.
Learn more about your options to reduce or remove an IRS estimated tax penalty. Get the facts from the tax experts at H&R Block.
Did you receive IRS Letter 3289? Learn more about letter 3289 and how to handle it with help from the tax experts at H&R Block.
Your request for a reduced installment agreement user fee was denied. Learn how to address letter 4213C with help from the tax experts at H&R Block.