Over the past few days, this series has covered employer-paid educational assistance programs, deducting your educational expenses, and special tax breaks for education. Today, two more ideas, starting with one that many people probably aren’t aware of:
• 529 Plans. If you miraculously have money left over in a 529 college savings plan that you established for a child, you can change the account’s beneficiary to yourself. Then you can then use the money for any qualified education expenses, including tuition, fees, and room and board.
• Early IRA withdrawals. Normally you can’t tap into an IRA until you reach age 59 1/2 without paying a 10 percent tax penalty. One exception, though, involves money you use to pay qualified education expenses. The downside, of course, is that whatever you take out of your IRA won’t be there for your later needs. Nor will it be quietly compounding, tax-deferred, in the meantime. So give this one some careful thought.
Tomorrow, in our fifth and final installment: What if you just want to take an interesting class or two?
—Greg Daugherty
Greg writes the “Retirement Guy” column each month in our Consumer Reports Money Adviser newsletter.
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