No. of Recommendations: 0
Greetings, DJFoolish, and welcome. You asked:

<<I just stumbled upon this site and I think it is great. I've been putting off opening a Roth IRA since I first heard of it, last year. It almost sounds too good to be true. I have a 401K, and an IRA (rolled from a previous 401K). Several questions I have are as follows, can I use Roth IRA contributions and earnings to finance child's college education, if need be, without penalties, tax free, when I'm 56 years of age?>>

You may use the IRA the annual contributions at any time for any purpose tax and penalty-free. The same goes for contributions from conversions of traditional IRA after the conversion money has been in the Roth for five tax-years. You must be age 59 1/2 and the account must be open for five tax-years to touch earnings penalty and tax-free unless you meet one of the criteria for a qualified distribution from a Roth. (Note: See my IRA discussion in the Foolish Retirement Plan Primer at for a description of qualified distributions.) You may take earnings free of penalty at age 56, but not taxes, when you meet one of the criteria for an exception to the early withdrawal penalty on an IRA distribution. Distributions to pay for the costs of a higher education is one of those exceptions. Thus, when you take Roth earnings to pay those costs at an age younger than 59 1/2, you will escape the 10% penalty. Just as in a traditional IRA, though, you will pay income tax on the earnings you have withdrawn.

<< If I open a Roth IRA today (for 1998) does the five year "clock" start today, 1/1/98, or the day I make the last contribution?>>

The five tax-year clock starts as of 1/1/98 for a 1998 Roth IRA contribution regardless of the day that contribution is made. You have until 4/15/99 to make that deposit for tax-year 1998.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.