cangoce[at]gmail.com wrote:

- quote -

There is no exception to the 10% early withdrawal penalty
for a 401(k). There is an exception to the 10% penalty for
IRAs if the distribution is used for qualified higher
education expenses in the same year of the distribution. If
you rollover your retirement plan assets to an IRA, then you
have changed the character of the account to an IRA and you
follow all the rules for an IRA. An early withdrawal from a
rollover IRA is subject to the same exception rule above.

All of the above is explained in IRS Pub 590.
http://www.irs.gov/publications/index.html

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

<cangoce[at]gmail.com> wrote:

- quote -

No. That exception applies only to IRAs, not to 401(k)'s.

- quote -

That's how you do it. Once you've rolled the 401(k) into a
traditional IRA, it's like any other traditional IRA, and
the education expense penalty exception applies. Be sure to
do the rollover from the 401(k) as a direct transfer so no
tax is withheld. See IRS Publication 575.

- quote -

No. I suspect you were reading something about Roth IRAs.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I have a question regarding 401(K) and any help regarding
this would be greatly appreciated.

I am in my mid 20s and am thinking of doing an MBA. I would
like to know whether I can use, WITHOUT PENALTY, the money I
have in 401(K) to pay tuition. I have read that money in IRA
accounts could be used for tuition. Is that the same with
401(K) also? If I do an MBA, I would be quitting my current
job and so my 401K would be rolled over into an IRA account
(at least this is my understanding of the process, please
correct me if am wrong). Does that mean the same rules that
apply to ordinary IRA would apply for this too?

Searching through the internet forums I have read that IRA
money could not be used for educational purposes without
penalty unless it had been in the account for five years. Is
this correct? My 401(K) is less than 2 years old. Does this
mean I would be penalized?

Some information regarding my 401(K) account.
* It is less than 2 years old
* It is a normal 401(K) account. Not a educational 401(K)
account. (I don't know something like this even exists)
* I have something is the range of US $ 10,000 in the
account.

btw. Here is a link I found about using IRA money for
education. But this does not discuss 401(K).
http://www.irahelp.com/cgi-bin/forum...ames/read/1797

Thank in advance for your help.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >