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Qualified Education Expenses

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ByBob

L1: Qualified Education ExpensesI want to start withdrawing money from my IRA to pay for college expenses for my children. My understanding is that I can do this without the 10% penalty tax if they are qualified higher education expenses.
I would also like to start a SEPP plan to provide retirement funds. Can I make both types of withdrawals in the same year without triggering the 10% penalty?
If so, would the college withdrawals impact the calculation of the SEPP withdrawal (assuming the amortization or annuity factor approach)?2004-08-26 21:56, By: Bob, IP: [205.188.116.209]

L2: Qualified Education ExpensesThis is one of the gray areas. To be safe, you may want to divide your IRA into two separate accounts.
In the first account place the funds that will be used to pay for educational expenses. In the second account place the funds to be used for the SEPP. When calculating the amount of the SEPP only use the funds in the SEPP account.
Keep the two accounts separate until the end of the SEPP and keep good records for both accounts. 2004-08-27 04:28, By: Gfw, IP: [172.16.1.71]

L2: Qualified Education ExpensesGfw,
A follow up question to your post…I took an Educational expense distribution from an IRA in June. I plan to begin a Sepp using this very same IRA with a start date in Sept and a account balanceas ofthe end of Aug. I thought this was OK based on the fact that the Edu. Dist.(6/04) was completed prior to the start of the Sepp (9/04) even though they took place in the same year.
I’ve alreadysplit& adjustedmy IRA’s for the start of this Sepp but Ican re-adjust the use of this IRA for the Sepp if you feel that this still falls within a grey area.
thanks. John2004-08-27 07:31, By: john, IP: [68.235.8.54]

L2: Qualified Education ExpensesJust keep good records and you shouldn’t have any problems since the educational withdrawal was made prior to the start of the SEPP. Good Luck 2004-08-27 07:45, By: Gfw, IP: [172.16.7.101]

L2: Qualified Education ExpensesJohn:
My only concern in this scenario is the coding of the 1099-R.
Just make sure the 1099-R for the SEPP amount is coded ” 2 “.
I believe the distribution for educational withdrawal will be coded as a ” 1 ”
and you will file Form 5329 to avoid the penalty.
2004-08-29 07:55, By: Gary T, IP: [24.145.164.87]

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