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Q: Can she use the IRA's without serious penalties?
A: Note that the withdrawal will be considered as taxable income
whether an exception applies or not. If an exception (I'll address shortly), does not apply, an additional 10% penalty will apply.
for Traditional IRAs
With Traditional IRAs, you defer taxes
until you begin to withdraw money. The rules vary depending on your age.
Withdrawals prior to age 59½
Distributions from Traditional IRAs prior to age 59½ are subject to a 10% penalty, in addition to applicable federal and state taxes. Under the following circumstances, you may be able to avoid the penalty on early withdrawals:
First-time home purchase
Qualified education expenses
Death or disability
Unreimbursed medical expenses
Health insurance, if you’re unemployed
For the purposes of the IRA withdrawal, the student loan payments does qualify as "Qualified education expenses". SEE BELOW:
Qualified education expenses. For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.
In addition, if the student is at least a half-time student, room and board are qualified education expenses.
The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts.
The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.
This may not be the answer that you were hoping for, and I do wish that I could provide you with a more favorable answer.
Please let me know if I can be of further assistance to you regarding this matter.
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