While IRAs are well-known as retirement saving vehicles, many investors don’t realize that the accounts may also be used to pay for college expenses without penalty. A recent article in the Chicago Tribune
pointed out why this might be an advantage for students:
Money put away in a retirement account like an IRA, whether yours or your child's, is not counted as assets against the family's expected contribution when applying for federal financial aid to college. Yet IRA funds can be withdrawn without penalty to cover tuition at an accredited college.
On the other hand, the money withdrawn will count as income on the following year’s financial aid application, the article says.
The article points out other facts about IRAs that tend to fly under the radar:
Your children can have an IRA:
It doesn’t matter if your children don’t have a nine-to-five job. As long as they can claim some sort of earned income, they can open an IRA.
IRA investing isn’t limited to stocks and bonds:
According to IRS rules, there are a variety of investment options for IRAs. Permitted investments include real estate, businesses, promissory notes, and much more.
Find out more about the permitted investments in an IRA here
, or click here
to schedule a time to talk one-on-one with a Senior Account Executive.