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| trixiezzz |
 Posted: Sat Feb 12, 2005 6:28 am Post subject: Is it true that you can use Roth IRA money for other things? |
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Investing Manager
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| I heard that you can start pulling money out of your Roth IRA before retirement and use it for other things , like education, tax free. is this true? |
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| eyesandearsjami |
| Posted: Tue Feb 22, 2005 4:20 pm Post subject: |
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Member Of The Month! February
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Well this one is kind of tricky. It's a bit yes and no, but generally no. In the first few years that you establish an IRA you can withdraw your basis out but not your gains. So, if you put in 2k and made $300 you could withdraw the 2k if it was for a qualified expense, such as being a first time buyer of a home, without being penalized.
But generally the answer is no you cannot withdraw from your IRA. If you would there would be a 10% early withdrawal penalty and you would be taxed on the withdrawal at your current tax rate.
Hope this helps,
Jami |
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| trixiezzz |
| Posted: Mon Feb 28, 2005 4:24 am Post subject: |
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Investing Manager
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| Well what I'm looking for the answer to is this: will we be able to pulll money out of a Roth IRA to pay for our childrens' college? I don't want to put it in if we can't take it out then if we need to (just for college, nothing else) |
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| noksagt |
| Posted: Mon Mar 14, 2005 10:22 pm Post subject: |
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Member of the Month! March
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| eyesandearsjami wrote: | | So, if you put in 2k and made $300 you could withdraw the 2k if it was for a qualified expense | Wrong. You can withdraw the contributions at anytime for any reason penalty-free. EARNINGS can be withdrawn after 5 years for the qualified expenses.
You will be able to take out contributions for your child's education. Assuming you have other retirement investments, this could be a very good strategy--retirement accounts aren't counted against you for the FAFSA. |
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| tylr |
| Posted: Sun Mar 20, 2005 5:59 am Post subject: |
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Investing Associate
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| trixiezzz wrote: | | Well what I'm looking for the answer to is this: will we be able to pulll money out of a Roth IRA to pay for our childrens' college? I don't want to put it in if we can't take it out then if we need to (just for college, nothing else) |
You can withdraw the contributions tax free but you may want to check into establishing a 529 plan which is specific for college savings. |
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| noksagt |
| Posted: Mon Mar 21, 2005 4:41 am Post subject: |
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Member of the Month! March
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| tylr wrote: | | You can withdraw the contributions tax free but you may want to check into establishing a 529 plan which is specific for college savings. | If you do get a 529, be sure to look beyond your state too: some offer better investments than others. (Choice is why I'm also a big fan of Coverdell IRAs.) Anyone thinking of investing in a college fund should take a long look at their finances, though. It can decrease your financial aid award & most plans are less forgiving if you "oversave" & want to use the money on something other than college. |
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