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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3151
Experience:  EA, CEBS - 35 years experience providing financial advice
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The tax code allows penalty free withdrawals from an IRA account

Customer Question

The tax code allows penalty free withdrawals from an IRA account if the money if used to pay for college expenses. Is a military thrift savings plan considered an IRA and if so, if will the funds used to pay for college expenses considered penalty free??
Submitted: 6 years ago.
Category: Tax
Expert:  Bill replied 6 years ago.

Unfortunately, the thrift savings plan is not an IRA and the exception to the penalty does not apply for distributions to pay for college expenses. If the funds are distributed from the thrift savings plan and rolled over to an IRA then the distribution can be taken from the IRA for college expenses. However, distributions from the TSP are only available to be rolled over after separation of service or after age 59 1/2.


Edited by Bill on 3/1/2010 at 2:55 AM EST

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