Have you ever been concerned that,although you are able to pay your child’s tuition, you may not be able toincorporate any penalties or fees accompanying the tuition costs?
Well, with an IRA fund, that worrycan be put to sleep. Typically, if you are younger than age 59.5, there is a10% penalty for withdrawing money from the fund. On the other hand, if themoney is being withdrawn in order to compensate college expenses, the penaltyis annulled. However, you will still have to pay the income tax.
The aforementioned IRA fund simplyconsists of extracting money from your existing retirement-oriented IRA funds.
Furthermore, it is imperative tomaintain as much money in the IRA fund for as long as possible, since there isno tax on the escalation. That’s right; tax-deferred interest and dividends!
This fund has no correlation tothe former “education IRAs,” which are exclusively designed for paying collegeexpenses. Although these funds are restricted to a $2,000 contribution per yearper child, they are not tax deductable. Conversely, money withdrawn from thisfund will fully escape federal tax, as long as the withdrawal is to pay forclassified higher-education tuition.
RichardL. Lipton CPA & Associates LLC, located in Florham Park, N.J.,draws on its founder’s 10 years as a stockholder and manager offamily-owned Sam’s Tire Co. in Paterson, N.J.
RichardL. Lipton CPA & Associates LLC “is structured to personally servelarge and small clients who have a need for business consultingservices as well as accounting and tax services. We have even developeda niche in the area of forensic accounting. Our clients have realizedthat this combination of skills is extremely valuable in providing thehighest quality professional services in today’s and the future’seconomy.” – Richard L. Lipton CPA
Contact Richard L. Lipton CPA & Associates LLC:
E-mail: [email protected]