| If you're like many Americans, you face a | | | | the money can be used for any qualifying |
| variety of challenges every day. Most parents | | | | educational expense. But, the disadvantages |
| and some grandparents find themselves | | | | are obvious. You're taking away from future |
| fighting a battle on two fronts: saving for | | | | retirement savings and you're reducing the |
| retirement and college at the same time. This | | | | amount of earning power you previously held. |
| can be a tricky problem. Saving more money in | | | | You're also faced with the fact that IRAs |
| one of the plans invariably leads to saving | | | | have contribution limits ($4000 a year) that |
| less in the other. Obviously you want to have | | | | can make it hard to restore your previous |
| enough savings to retire comfortably, but at | | | | savings level. |
| the same time, to put your kids or grandkids | | | | |
| through a quality college. | | | | But that doesn't mean there aren't ways to |
| | | | catch up. Currently, for people over 50, the |
| So where do you draw the line between taking | | | | law allows you to make extra contributions of |
| from one to give to the other? And how do you | | | | up to $500 a year, this is set to increase to |
| plan successfully to find a proper balance | | | | $1000 a year in 2006. While this isn't much, |
| that benefits both you and your children? | | | | it can at least help restore some of your |
| That problem is highlighted by the question | | | | withdrawal. However, just as college savings |
| of whether or not you should withdraw from an | | | | opportunities have increased, so have |
| IRA to help pay for college tuition. The | | | | retirement savings opportunities. Part of a |
| general consensus seems to be: not if you can | | | | comprehensive retirement plan includes |
| help it. | | | | investing in various types of retirement |
| | | | plans, including 401(k)s and private savings. |
| Generally you want to have a successful | | | | In addition, your entire retirement shouldn't |
| enough college savings program that you don't | | | | be too heavily anchored in one savings |
| have to worry about finding alternative | | | | vehicle, IRA or otherwise. |
| sources of money for tuition. But with | | | | |
| sky-rocketing credit hour prices and housing | | | | No matter what you do, it's usually wise to |
| costs on the rise, it's a more difficult | | | | seek input from a financial professional. |
| proposition than it was even a decade ago. | | | | Withdrawing from an IRA to pay for college |
| | | | has a lot of unseen consequences that can |
| But while prices have been increasing, so | | | | harm your retirement plan and make your |
| have opportunities to save. 529 Savings | | | | golden years a bit more lean. One of your |
| Accounts, Prepaid Savings Accounts, and | | | | best bets is to plan carefully for college as |
| Coverdell Accounts are just a few of the easy | | | | soon as possible for your children or |
| ways to save for college. | | | | grandchildren so you're not forced to decide |
| | | | between retirement or college. |
| One advantage of an IRA withdrawal is that | | | | |