Traditional and Roth IRAs

While many people may think of Traditional and Roth IRAs as retirement savings vehicles, current tax law allows investors to tap these accounts for qualified higher education expenses. Any account earnings will be taxable when withdrawn if the accountholder is under age 59½, but withdrawals are exempt from the 10% penalty if used for qualified higher education expenses.

What’s more, the federal financial aid formula does not take retirement assets into account, meaning that the student may qualify for increased financial aid. However, the Traditional or Roth IRA distribution will affect the student’s eligibility for financial aid in the following year as it must be included in the parent’s income.

Your Legend Advisor can guide you in creating a comprehensive college savings strategy, account setup and investment selection. He or she can also oversee your plan, to help ensure it remains on track to achieve your goals.

See Legend's Comparison of Investments for College Savings for further details.