Retirement & Financial Planning Report

If you are looking for sources of college funding, consider your IRA. You can take money from your IRA, without owing a tax or a penalty, as long as you repay the amount within 60 days. You’re allowed to do this type of rollover once every 12 months.

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* Tapping a traditional IRA. If you miss the 60-day deadline, you’ll probably owe income tax on the money you took out. You won’t owe a 10 percent early-withdrawal penalty, though, if your qualified higher education expenses for the year are at least as much as your withdrawal from the traditional IRA. Qualified expenses include tuition, fees, supplies, and equipment. If your youngster attends college at least half-time, room and board costs count, too.

* Tapping a Roth IRA. Distributions are tax- and penalty-free, up to the amount of your contributions. Distributions are also tax- and penalty-free after five years from creating the account and after age 59-1/2. Before the five-year mark or before 59-1/2, withdrawn Roth IRA earnings are taxable but the 10 percent penalty is waived if the distribution is spent on college costs.