Early Withdrawal

Question: Is there a penalty for withdrawing from a Roth IRA to pay a student loan?

I know there is usually a penalty for Early Withdrawal but isn’t that waived for education expenses?

Answer: There is no penalty exception for withdrawing funds to pay for a student loan.

That being said, you would be able to withdraw a portion of your Roth IRA savings without paying taxes or penalties. With a ROTH, you can withdraw, without penalty, up to the dollar amount that you have contributed to the plan. Any earnings would be subject to taxes and penalties if withdrawn.

Example:
Let’s say you contributed $20,000 over the years to a ROTH. That $20,000 has grown to $25,000. You would be able to withdraw up to $20,000 penalty free… but if you were to withdraw more than the $20,000, taxes + penalties would apply.

Hope this helps!

Self Directed IRA Part 6 Private Lending