I have a simple question. I am going through a professional certification education course at the moment. To be specific, I am taking classes online through Kaplan to satisfy my education requirements to sit for the CFP Exam. Do the costs associated with the tuition and books at this program qualify them as education expenses that would avoid the 10% early withdrawal penalty from an IRA? Thanks!
If the requirements as stipulated per IRS guidance are met, then yes. Now you will still pay taxes on the early withdrawal. But it will be exempt from the 10% early withdrawal penalty.
-First, the school has to be on the list of "qualified education institutions. Basically, a qualified school is any college, university, trade school, or other post secondary educational institution eligible to participate in a student aid program run by the U.S. Department of Education. Check the list on the IRS website at https://ifap.ed.gov/ifap/fedSchoolCodeList.jsp. There's a link to an excel document on that page. Open the docuemtn and search it for "Kaplan". Do note that there is more than one "Kaplan" in that list. So use the address to "confirm" that the one you are enrolled with, does "in fact" qualify.
- Second, you must be enrolled in a course of study that will lead to a degree or required certification. (In your case, it would seem a required certification applies.)
For other requirements and to confirm you meet them, please read IRS Publication 970 starting o page 50,
Education Exception to Additional Tax on Early IRA Distributions. You can read the publication at https://www.irs.gov/pub/irs-pdf/p970.pdf Make sure you read "all" of chapter 9, so you don't miss some of the "disqualifiers" that could potentially disqualify you for this penalty exception.