Can You Pull Money Out Of A Retirement Account?

Yes. Savers can make an early retirement withdrawal to pay for college. However, borrowing from retirement accounts may result in more taxes and penalties and less money in retirement.

With a Roth IRA, savers can withdraw their contribution to make a qualified education expense without taxes. However, the withdrawal may come with penalties.

Yes. Parents can make an early retirement withdrawal to pay for their child's college degree. However, early withdrawals may result in taxes and penalties.

The IRS defines a qualified education expense as a cost directly related to college, such as tuition. The student must also meet eligibility requirements.

Savers receive a tax deduction for putting money into a traditional IRA, but making an IRA withdrawal before turning 59.5 triggers taxes and penalties. Savers can withdraw money from an IRA for college, but it comes at a price.

The IRS waives the 10% penalty for savers using their withdrawal for qualified education expenses, such as tuition and textbooks. However, savers still need to pay taxes on the withdrawal.

Savers can make a Roth IRA withdrawal at any time without paying taxes on the money or owing IRS penalties. However, withdrawing capital gains triggers extra taxes and, potentially, penalties. If you have held your account for less than five years and withdraw money for a qualified education expense, the IRS may waive the penalty.

While a Roth IRA withdrawal might seem tempting, savers cannot repay the money. As a result, they cannot benefit from the future earnings of their investment.

If you make an early 401(k) withdrawal to pay for school, the IRS automatically withholds 20% of the early withdrawal for taxes and takes a 10% penalty on the amount.

Students may qualify for a waiver on the 10% penalty under the hardship withdrawal rules. However, savers must demonstrate "an immediate and heavy financial need" and may not learn whether they qualify for the waiver until they file their taxes.

The Federal Employees Retirement System (FERS) provides pension and savings plan options for government employees. In addition to the federal plan, state and local employees may have their own pension plan.

The rules for pulling money from a pension vary depending on the plan, but doing so may trigger taxes and penalties. For example, federal employees who pull from their Thrift Savings Plan pay taxes on the withdrawal at their normal tax rate, plus state income tax and an IRS early withdrawal penalty of 10%.