If you have money saved in a traditional IRA, you may be wondering if you can use those funds to pay for qualified higher education expenses. The answer is yes, you can use traditional IRA funds to pay for qualified higher education expenses, but there are a few things you need to know first.
When you take money out of your traditional IRA, you will have to pay income taxes on the amount that you withdraw. However, you will not have to pay the 10% early withdrawal penalty that usually applies to IRA withdrawals made before age 59 1/2.
Keep in mind that you can only withdraw as much money as you have saved in your traditional IRA. So, if you have $10,000 saved and you want to use $8,000 of it to pay for qualified higher education expenses, you can do so. However, you would only have $2,000 left in your IRA.
If you are thinking about using traditional IRA funds to pay for qualified higher education expenses, make sure to talk to a tax advisor first. They can help you understand the tax implications of taking money out of your IRA and help you decide if it is the right decision for you.
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