A few weeks ago a friend approached me very frustrated. His son just told him that he’s not going to college, which was a huge disappointment for my friend. But what further added to the pain was he had put away thousands of dollars every year into a 529 plan for his son, and now he couldn’t touch that money without picking up the gains on the growth and with a whopping additional 10% tax penalty. Ouch!
“Isn’t there a better way to save for college?” he asked me. “What do you recommend your clients do to save for college?”
“That’s easy,” I said. “Hire your kids - with the condition that they put everything in their Roth IRA.”
Roth IRA Funds Can Be Used for College1
Most people are unfamiliar with the rule that Roth IRA contributions can be used for qualified tuition expenses without incurring the additional 10% tax penalty...