Submitted By: Sharon
Answered: June 11, 2013 8:30 am

Are contributions to a Roth IRA appropriate for education purposes?

Roth IRAs are designed for retirement savings. While contributions are not tax deductible, withdrawals of earnings after age 591/2 are tax free as long as the account has been open for at least 5 years. While withdrawals of contributions can be taken at any time for any reason (including education costs), this defeats the purpose of saving for retirement. There are many other savings vehicles specifically for education, including 529 plans, Coverdell education savings accounts, and U.S. savings bonds.

Tax Glossary

Standard mileage rate

A fixed rate allowed by the IRS for business auto expenses in place of deducting actual expenses.

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