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Home > Paying for College > Education Tax Benefits > Withdrawals from Traditional or Roth IRAs

 

Withdrawals from Traditional or Roth IRAs

The benefits of IRA withdrawls.

 

You may be able to avoid the 10 percent additional tax on traditional or Roth IRA withdrawals before age 59 1/2 when you use it for qualified higher education expenses. You will owe income tax on at least part of the amount withdrawn, but you will not have to pay the 10 percent additional tax on early withdrawals. You can open a Individual Retirement Account at financial service firms and institutions.

Eligibility

You are eligible if you pay for qualified higher education expenses for yourself, your spouse, or your or your spouse's children or grandchildren in the year you make the withdrawal from your traditional or Roth IRA.

Qualified Expenses

Qualified higher education expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. In addition, if the student is at least a half-time student, room and board are qualified higher education expenses. Qualified higher education expenses are reduced by tax-free withdrawals from a Coverdell Education Savings Account (ESA), tax-free scholarships such as a Pell Grant, tax-free employer provided educational assistance, and any tax-free payment (other than a gift, bequest, or devise) due to enrollment at an eligible educational institution.

Eligible Educational Institutions

Eligible educational institutions are any college, university, vocational school, or other postsecondary educational institution eligible to participate in student aid programs administered by the United States Department of Education.

For additional information on withdrawals from Traditional or Roth IRAs, see Internal Revenue Service Publication 970.

 

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