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    ohararfrykman's Avatar
    ohararfrykman Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Jan 14, 2007, 09:54 AM
    Withdrawal from 401k for child's college tuition
    Hello,

    I am trying to confirm something for my brother.

    In 2006 he did an early withdrawal from his 401k of $5,000.00 to go towards his daughter's first year of college tuition.

    What ax liability his he facing?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Jan 14, 2007, 10:52 AM
    He will face normal taxes (state and federal) on the distribution plus a 10% Early Withdrawal Penalty.

    Had he transferred the money to a rollover IRA, THEN withdraw the money, he could have avoided the 10% penalty. Unfortunately, that option only applies to IRAs, not 401Ks.
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