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FoolMeOnce writes:

<<I am contemplating early retirement in about a year. Until recently, early IRA withdrawals by SEPP were one of the ways I was going to cope with putting my two daughters through college. I am now leaning towards avoiding the SEPP withdrawals and instead withdrawing funds only as necessary to help in funding college via the college funding exception instead.

This would appear to allow much more flexibility since I need only draw funds as necessary to meet college expenses and do not require early withdrawals to meet normal living expenses. Since I will be retiring at age 47, SEPP withdrawals would have to continue for at least 12 years whether or not the money is required, and once established allow little flexibility in determining the amount to be withdrawn.

Am I thinking clearly on this? Does anyone know of any drawbacks to this approach assuming that the college expenses properly qualify for the exception? If the unthinkable should happen and I find it necessary to withdraw funds aver and above those required for educational expenses am I correct in believing that the option will always exist to initiate SEPP withdrawals in addition to those required for college. Thanks in advance for any assistance.>>

While an education expense exception is available for early withdrawal, it has not to my knowledge been tested when used to take money from an IRA from which SEPP have begun. IMHO the IRS would probably challenge such a withdrawal and disallow SEPP if another withdrawal was taken at the same time. A better approach, again IMHO, would be to split off a chunk of your IRA to separate accounts. Then you can pick and choose which to use for SEPP and which to use for education. That way there would be no room for an IRS challenge.

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