The 10 percent penalty tax on withdrawals from an IRA before age 59-1/2 does not apply to distributions from either a traditional IRA or a Roth IRA to the extent that the amount withdrawn is used to pay qualified higher education expenses. The qualified higher education expenses may be incurred by the taxpayer, the taxpayer's spouse, or any child or grandchild of the taxpayer or the taxpayer's spouse.
Child means an individual who is a son, daughter, stepson or stepdaughter of the taxpayer, or an eligible foster child of the taxpayer (i.e., an individual who is placed with the taxpayer by an authorized placement agency, or by a judgment, decree or other order of a court of competent jurisdiction). A legally adopted child of the taxpayer, or a child who is placed with the taxpayer for legal adoption, is treated the same as a child by blood. A taxpayer is eligible to make a penalty-free withdrawal from an IRA to pay the qualified higher education expenses of a child even if the child is not a dependent of the taxpayer.
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