IRA withdrawls for higher education expenses

L1: IRA withdrawls for higher education expensesWhat IRA withdrawls, for higher educational expenses, prior to 59.5 are exempt from the 10% penalty. For example, can one withdraw $ for college tuition for dependant children without penelty?2004-03-14 16:03, By: Bill, IP: [24.92.241.135]
L2: IRA withdrawls for higher education expensesGenerally speaking, distributions from your IRA can be made to pay for post-secondary qualifying۝ educational expenses for yourself, your spouse and your children. Qualifying expenses include: tuition, fees, books, supplies & equipment required for attendance at an eligible educational institution. Further, room & board become qualifying expenses when the student is at least a _ time student. These permissible withdrawals are reduced by any Hope scholarship credits or Lifetime learning credits that are in effect.
See IRC 72(t)(2)(E) & IRS Publication 590.
TheBadger
wjstecker@wispertel.net
2004-03-14 17:31, By: TheBadger, IP: [38.116.134.130]

L2: IRA withdrawls for higher education expensesThis discussion generates a question which I haven’t seenaddressed anywhere.
If someone has a SEPP operating, would the IRA owner be able to take a penalty-free withdrawal for higher education expenses without causing the SEPP to be a ‘busted’ plan?
I know that if you change the distribution amount to pay for a new car this will cause the plan to be ‘busted.’But what happens if you make a withdrawal because of a reason which itself has an exception to the 10%, early withdrawal rule?
Could this be the next PLR input?
Jim2004-03-15 08:48, By: Jim, IP: [68.1.147.61]

L2: IRA withdrawls for higher education expensesHello JIm:
Beleive it or not, this issue has never been decided; no case law and no PLRs. There are valid arguments on both sides of the issue but no one has stepped forward to solve the question.
I suspect that taxpayers who already have SEPP plans in progress have been warned away from taking an additional distribution (for another qualified purpose) by their professional counsel. Further, most of the other exceptions are more-or-less, one-time stuff: home purchase, education, medical expenses, etc. such that the amount of the other withdrawal is too small to make the issue worth solving.
That said, I would like to file a PLR request on this issue; it just takes a real client with a real issue to start the process.
TheBadger
wjstecker@wispertel.net
2004-03-15 09:06, By: TheBadger, IP: [38.116.134.130]