You can withdraw contributions from a Roth at any time for any reason.
Just don't touch the earnings or you will have to pay penalties.

JLP

http://allthingsfinancial.blogspot.com

my understanding is money in child's name counts 4 to 1 more than money
saved in parents name for Federal aid. If child is expecting aid and
there are assetts, my understanding is that it's best for parent to own
the assetts. My understanding further is the 529 plans are counted on
the child's name, not the parents.

and the loans were dealing with are subsidized vs unsubsidized. The
interests rates on my loans were the same. Difference was accrued
interest at graduation vs not accrued interest at graduation (un
subsized require you to pay interest only when in school, or defer
interest payments even though they are due- meaning 3 years later at
graduation the $3000 loan I took out had grown because of accrued
interest while in school).

If you have more recent information than this (my information is 5-10
years old)

another disadvantage is if you consolidate a subsized with an
unsubsized loan, the whole loan becomes unsubsidized, which has
ramifications if you lose your job and want the government to assume
interest payments.

but overall the loan amounts I received were the MAXIMUM allowed. I
received the maximum subsidezed (some years only $600), then the rest
was un subsidized. Poorer students got it all subsidized, richer
students were all unsubsidized and I was in the middle (typical me).

several years ago smart money magazine had an article about the student
aid game to play and gave great hints, tips and tricks for the aid
form. I learned much of what was posted here through individual
experience and that article.

"jIM" <noreplysoccer[at]hotmail.com> wrote
snip
- quote -

I realize you have no kids yet, and so this is just an idea of yours still,
I assume, under development. May I offer a few things for your consideration
as you refine this plan?

If your kid remains a dependent through college, then the amount of certain,
advantageous college loans (Stafford for example) offered to him/her will
depend in part on his parents' assets.

Especially if you cannot get your child removed from dependent status, you
hamstring him/her as far as the amount and interest rates on loans available
to him/her. See for example
http://www.collegeview.com/financial.../loandown.html

Meanwhile, as you try to give your kid a real-life lesson in personal
finance and loans, your taxes benefit because you count your kid as a
dependent.

Even a legally independent son or daughter of yours well past the age of 21
may have some difficulty becoming "divorced," so to speak, from family
assets when applying for advantageous, usually government backed in some
way, educational loans. E.g. if you know your kid will, as a matter of law
and fact, see an inheritance from a relative sometime, you'd probably best
keep this to yourself. Otherwise, the kid will be obligated to report this
on Stafford loan applications for graduate school, and what he/she will be
offered will be less as a result.

As a matter of reality, it's very difficult to give a child a true real-life
lesson in independence and personal finance using student loans and demands
that he/she put him/herself through college or even graduate school.

If your kid is smart, then be prepared for the possibility of some ruffled
feathers when he/she finds out that his/her financial independence was a
legal fiction, particularly if you profit from it being a fiction.

Otherwise, I do agree it's important for a kid to take some responsibility
for paying for college. Doing otherwise is probably a disservice to him/her.
But IMO there are limits as to what is ethical financial behavior by a
parent.

TMF wrote:
- quote -

Go with the 529. If you pull money out of your Roth before you reach
retirement age (59 1/2), you'll pay taxes and penalties. I'm guessing
your kids will need the money for college before you reach that age.

There are no restrictions (to my knowledge) on what you use a 401(k)
LOAN for (same rules apply regarding taxes and penalties for early
WITHDRAWAL). However, if you and your employer part ways (you quit,
get fired, etc.), you have to repay the loan amount. If you can't
repay it, it will be considered and early WITHDRAWAL and the taxes and
penalties kick in.

The 529 is a great way to save tax-free money for college (provided you
use the money from the 529 for qualified college expenses).

Ryan

several points:

contributions to a Roth IRA can be withdrawn before retirement. Exact
rules are sketchy to me, others can comment to this effect. I think
contributions can be withdrawn at any time, without penalty. (note
difference between contributions and earnings inside of Roth account)
contributions and earnings in a 401k can be withdrawn for medical
reasons without a penalty, but will be taxed (I think). Other reasons
for withdrawing from a 401k without penalty include reaching age 70 1/2
and a few other conditions. Ask if education expenses are one of the
other conditions.

earnings in a Roth IRA can be withdrawn with a penalty prior to
retirement.

401k plans allow loans where you pay back the amount borrowed, plus
interest. Many 401k plans also assess fees for taking a loan.

"college shortfall"-as you put it- is a"short term" problem in my
opinion. At a given point in time you do not have enough money. Once
the need for college goes away, the need for the money also goes away-
short term problem.

"retirement surplus" is an oxymoron, in my opinion- how will you KNOW
you have more money than you need if you have not retired yet? If you
have retired when the college bill is due, then my opinion would be the
money is best used for retirement and let an 18 year old take a loan.
The 18 year old has 50 working years ahead of them to pay off loans and
get ahead. A retiree is around 70 years old and has few earning years
left before they need to live on what they saved. The amount of time a
70 yo has to save more money, pay off any loan or change their
standard of living is low.

I have no kids (yet) and my thought process now is to make them pay for
all of school and if I feel good about life, I will pay off their loans
when they graduate. Requires me to save money, allows me to control
the investments and the kid to finish school. The loans should also
establish a credit history and make the student think about spending
$80,000 and not making their senior year the best 3 years of their life
at a cost of an additional $40,000.

I have heard and read of buying permanent insurance policies to fund
college, and that is a consideration. Buy a $100,000 insurance policy.
if you die, money provides for kids education, if you survive to the
kids college years, the cash value pays for college. Once the kids are
old enough to be out of college, there is no need to carry as much
insurance.

I am planning on college for my 2 children (aged 5 and 2). I invest in
a 529; however as an alternative - is it allowable to use funding from
a ROTH-IRA to support college expenses.
If this is allowed - then is a withdrawl from a 401K plan allowed as
well.

I am trying to best understand how to model the investments; whether to
put a portion in to a 529 and a portion in to a ROTH. This way - the
ROTH can be used to either fund retirment or fund college - if there is
a college shortfall and retirement surplus.
Thanks