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Posted: 12/14/2013 10:55:39 AM EST
I am by no means an expert at taxes, but I am sure someone here is.

If I make contributions to an IRA, I know I can take premature distributions if it is for qualified education expenses. However, I am unsure of how long the contribution must sit there.

I am currently a graduate student, and I would like to lower my income and my wife's by the $11k ($5,500 each), because doing so will put us in the next lower tax bracket (25%). However, I would like to be able to get at that money in order to pay tuition. So, can I make a contribution and then immediately take a premature distribution and use that to pay tuition?

Any help would be greatly appreciated.
Link Posted: 12/14/2013 10:59:26 AM EST
I know we have like 10 dozen CPA's here, and I know I am not the first person to have this idea.
Link Posted: 12/14/2013 11:01:13 AM EST
Is it a Roth or traditional?
Link Posted: 12/14/2013 11:01:32 AM EST
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Originally Posted By PKT1106:
Is it a Roth or traditional?
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Traditional
Link Posted: 12/14/2013 11:04:09 AM EST
I haven't made any contributions yet, since I have up till April 15, 2014. However, I am wracking my brain trying to figure out how to get into a lower bracket, since I am right at the cusp by a few thousand. If we both make a $5,500 contribution, that should do us.
Link Posted: 12/14/2013 12:34:32 PM EST
Link Posted: 12/14/2013 12:38:34 PM EST
[Last Edit: 12/14/2013 12:38:46 PM EST by Alpaca]
If you go from 25% to 28% ... you will only pay the 28% for the portion of your income that is in the higher bracket... so you pay 3% more on 2,000... you are looking at $60.
Link Posted: 12/14/2013 12:53:41 PM EST
Originally Posted By poink:
I am by no means an expert at taxes, but I am sure someone here is.

If I make contributions to an IRA, I know I can take premature distributions if it is for qualified education expenses. However, I am unsure of how long the contribution must sit there.

I am currently a graduate student, and I would like to lower my income and my wife's by the $11k ($5,500 each), because doing so will put us in the next lower tax bracket (25%). However, I would like to be able to get at that money in order to pay tuition. So, can I make a contribution and then immediately take a premature distribution and use that to pay tuition?

Any help would be greatly appreciated.
View Quote



Moving to a lower bracket doesn't help you, just like moving to a higher bracket doesn't hurt you.
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