If I pull money from my 401k to pay for my childs college, what will i need to file on my taxes in 2025?

[xmasbaby0]

Any time you take money out of a retirement account like a 401k or an IRA, you will receive a 1099R at tax time from the financial institution that handles your account.  That 1099R has to be entered on your tax return.

Here is some information from the IRS regarding whether money you take from a retirement account is taxable and/or if you will have an early withdrawal penalty:

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-o...

[Bsch4477]

You will owe tax on the withdrawal at your marginal tax rate and if you are under 59 1/2 years old you will be assessed a 10% penalty. 

[Opus 17]

This is important!  If you do this, you should rollover the money to an IRA first.

Assuming this is a pre-tax 401k, withdrawals are always subject to regular income tax.  If you are under age 59-1/2, withdrawals are also subject to a 10% penalty, unless you separated from the company at age 55 or higher.  There is no exception for higher education expenses.

However, if you withdraw money from an IRA, you can claim an exemption to the additional 10% penalty if you use the money to pay qualified higher education expenses for yourself, your spouse, a child, or grandchild.  That means that, to avoid the additional 10% penalty, you should do a rollover from the 401k to an IRA (this is non-taxable), then withdraw from the IRA (this will be subject to regular income tax but not a 10% penalty.)

[dmertz]

If you are under age 59½ and have not separated from service with the company that provides the 401(k), it's unlikely that you will be permitted to roll over funds from the 401(k) to and IRA.  A distribution from the 401(k) under these conditions would likely have to be a hardship distribution and hardship distributions are not eligible for rollover.