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