OT: Savings in IRA vs 529

[RUSK97]

Anybody know if you can draw from an IRA for your kid's college education without penalty? Any thoughts as to one or the other?

 

[jason21psu]

I'm 90% sure you can however, everything I've read for funding a college education suggests the 529 plan is pretty unbeatable. I'm not a financial planner but I did stay at a Holiday Inn Express last night.

 

[PSU_Nut]

Anybody know if you can draw from an IRA for your kid's college education without penalty? Any thoughts as to one or the other?

Yes there is not the 10% penalty, however that the money is considered income in financial aid calculations where as a 529 plan is not. Also the standard income tax rules still apply. I highly suggest sitting down with a financial planner to discuss options for funding college. With rates as low as they are now a better option may be a home equity loan which should have a much lower interest rate then what your IRA is making and that interest is tax deductible. If you starting to save for college for the future most recommend a 529 plan.