Can I withdraw funds from a retirement account for my sons college without the penalty?

I'm not 55 years of age
The account was a pretax funded account.
I was hoping to help pay for his college with some funds from my own IRA and was told this may be able to be done without paying penalties. I am sure there must be parameters for this though. i realize the money withdrawn would be taxable income but was hoping to avoid the 20% penalty usually charged. Any help would be appreciated. thanks
Rick

I'm afraid unless you're 591/2 the penalties will apply to a pre-tax retirement account. Some retirement accounts will let you take a loan against the account for a college education or the purchase of a first home but then you pay back your account with interest. Check with your employer/bank.

With out looking over the exact papers that you should have gotten with your IRA account I can't tell you for sure what if any penalty you will incur but I can tell you that there are a couple of different types of IRA accounts - the old school account - the kind my daddy and mom got when they were young - there were penalties for every little thing - these new IRA accounts have loop holes - mine has a loop hole of I can take out so much to pay for my child's education with no penalty if he keeps a GPA above 2.5 - now mine is a rare case I chose to take that loop so that my son would know the pain of having to pay off my penalty if he screwed up.

A pretax IRA is most likely a ROTH IRA, I am unaware of any allowance for tuition payments to be a penalty free event.

However, if you with draw the funds and pay the 10% penalty (not sure where you got a 20% but that may be your account's rules). Since this was a pre tax account, you will likely not owe additional income tax on the withdrawal.

If you are eligable you may get the lifetime learning credit. This credit, which may be available to you would lower your taxes dollar for dollar on 20% of qualified education expenses. For example if you spend 10000 on tuition you get a 2000 credit. Assuming you're in the 25% tax bracket, your penalty would be 2500, which is nearly offset by your credit.

I would strongly advise agaisnt this, it would be far better to find an alternative source for funds.

Wrong Wrong Wrong!

You CAN withdraw funds from your own IRA (generally not from a 401k) to pay tuition. There is no 10% penalty. (It is a listed exception).

If you have a SIMPLE, different rules apply.

You lose the growth for your own account AND the funds withdrawn are taxed at your regular tax rate.

You also may not be able to claim certain education credits on your return for money that avoids the 10% penalty, but funds from your pocket to pay tuition do count for the ed credits,

The WealthBuilder
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