Ira withdrawal for college

Joshuat2288
Joshuat2288 Member Posts: 1 Newcomer
edited January 15 in General

Hi,

I withdrew from my Ira and paid for tuition. What do I need to do and how do I fill out a form needed to not pay a penalty/tax?

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Answers

  • GerhardtQ
    GerhardtQ FreeTaxUSA Agent Posts: 11

    As long as you withdrew that money from an IRA, not a 401(k), you may claim an exemption to the 10% early withdrawal penalty for the distribution, so long as you used it to cover qualifying higher education expenses. Qualifying higher education expenses include tuition.

    This is consistent with the information available on the IRS website here:

    https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions

    You'll receive a 1099-R from your retirement brokerage company for the year you received the distribution. Depending on the information they have about your use of the distribution, they'll likely report Code 1 in box 7 of that 1099-R (this code designates your distribution amount as an 'Early distribution with no known exception'). To report the form correctly, enter the 1099-R into our software under 'Income' > 'Retirement Income', then continue. The program will prompt you to choose any relevant exemptions to the Early Withdrawal penalty you may qualify to claim on the subsequent screens.

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