Education: An Exception to the Rule
Generally, the IRS charges an
additional 10% penalty on taxable withdrawals from IRAs,
401(k) plans, or other retirement savings vehicles if they are made prior to age 59½.1 This encourages people to protect their savings, so they do not need to rely solely on state benefits, such as Social Security, in their senior years.
However, the IRS does offer a number of
exceptions to this rule that are designed to assist people with some of the big, important expenses in life. In addition to provisions for
first-time home buyers and those with heavy medical bills not covered by insurance,
using IRA funds to pay for college tuition is one of the most useful exceptions to the 10% penalty rule
unless it starts to flourish and my 50 plus shares pay off
