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No Penalty For Early Withdrawal of
IRA Funds To Pay Higher Education Expenses
The law
lets individuals receive distributions from their IRAs to
pay higher education expenses without incurring the 10% early
withdrawal penalty that usually applies to withdrawals from
an IRA before age 59 1/2. (The regular income tax on the distribution
still applies.)
The penalty-free withdrawal is available
for "qualified higher education expenses," meaning
tuition at a post-secondary educational institution, as well
as room and board, fees, books, supplies and equipment required
for enrollment or attendance. Expenses for graduate
level courses are also covered.
The expenses can be incurred by the
IRA owner, his or her spouse, or any child or grandchild of
either spouse. There is no requirement that the child
or grandchild be a dependent of the IRA owner.
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