Qualified Education Expenses for Roth IRA Distributions

In regards to the 10% additional tax, the IRS considers qualified education expenses to be the following:

• Tuition
• Fees
• Books
• Supplies
• Equipment required for attending or enrolling in the institution
• Costs associated with special needs services for special needs students connected to enrollment at the school, university, college or institution.

What about room and board?
Room and board expenses qualify to the extent that it is not more than the greater of the following situations:

• Allowance: The allowance for the R&B, as decided by the qualified educational organization, that was included in the cost of attendance (for federal financial aid purposes) for a certain academic period and living arrangements of the scholar or student.
• Amount Charged: The amount charged if the student is living in housing owned or operated by the institution.

What is an eligible educational institution?
The IRS defines an eligible education institution as an organization eligible to participate in a student aid program administered by the U.S. Department of Education including:

• Colleges
• Univeristies
• Vocational schools / tech schools
• Postsecondary educational institute
• Note: there are some institutions outside the United States that are qualified for U.S. Department of Education student aid programs

If you are not sure, simply ask your school if they are qualified to accept student aid administered by the U.S. Department of Education.

Another way to check is to search the U.S. Department of Education Database of Accredited Postsecondary Institutions and Programs located here: http://ope.ed.gov/accreditation/Search.aspx

What about part time or half-time students?

The IRS says that room and board are qualified expenses for half time students. They define a half time student as someone is enrolled for exactly half the full-time academic workload for the field of education that the person is pursuing as determined by the standards of the school being attended.

Next: What are the Non-taxable Distribution Amounts?