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Author: joemo33 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121340  
Subject: Tapping IRA to get MBA scenerio Date: 7/18/1998 2:23 AM
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I'm looking for guidance. This is a pretty tough situation and I have yet to find an "expert" capable of understanding the question, less yet all the twists to the answer. Anyone's input is welcome.

In 1998 we should have an AGI of $115,000 (mom, dad, 2 kids under 5). I have a 401K at my previous employer of over $500,000 that I can roll into an IRA with a weeks notice. I have an IRA with about $30K and a 401K at my present employer of about $30K. We have no other savings to speak of. We live in Texas where there is no state income tax.

I am considering selling the house (about $30K equity) and moving to Boston or Palo Alto, Ca. in August, 1999 to get an MBA at either Harvard or Stanford, respectively (assuming I can get in). I'd estimate that I will have about $60K AGI for 1999 before we'd move.

The question is, what is the best strategy for minimizing taxes. I'm pretty sure that rolling the 401K monies into a self directed IRA is the best thing... given that I can take out the education expenses (estimated at over $60K/year for these two programs). I'm concerned about the state taxes of Mass. or Ca. kicking in.

To add a further twist, Harvard (my first choice) has a new program that allows starting in January '00 instead of Aug '99 (no summer break though). Should I just work the full year 1999 and be a student with no income for '00 other than taking money out of my plans.

All helpful comments are appreciated.
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