Message Font: Serif | Sans-Serif
No. of Recommendations: 4
How about plan C.

Leave the retirement money alone. It is for retirement. Save up some money for grad school, then go once enough has been saved. This would be my first choice. And it's my only recommendation if the grad degree would not pay for itself plus the lost wages while in school.

Or plan D.

Get a student loan. Those are generally at very reasonable interest rates and at good terms for the borrower.

While in school, you could take advantage of the low income year to convert part or all of the traditional IRA to a Roth. I've long been an advocate of waiting for such an opportunity to convert.

If you insist on raiding the retirement, here's plan E.

Convert in 2010 only the amount needed to pay tuition in 2010. Elect to report the income in 2011 and 2012. Then in 2011, convert the rest (or just more) of the IRA to a Roth. That gets more of the conversion income into 2011 with its lower tax bite.

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
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.