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I am hoping someone knows whether it is possible to rollover the entire amount of a 401K into an education IRA (it would obviously exceed the yearly max. contribution of $500).

No. Rollovers to Ed IRAs can be from only other Ed IRAs. Life would have been much simpler had these been called Education Savings Accounts, since they bear little resemblance to IRAs as we know them.

I have returned to school and would like to access money from my 401K w/out dealing with all the penalties. If rolling the money over into an education IRA is not possible, does anyone have another foolish suggestion?

If you roll the 401(k) into a traditional IRA and withdraw money from the IRA to pay qualified higher education expenses, you pay only tax on the amount withdrawn from the IRA, escaping the 10% premature distribution penalty. You'll find details in IRS Publication 590.

Phil Marti
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