Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Wednesday, August 13, 2014

Using a Roth IRA for College and Retirement Savings

Roth ira

Many people today are concerned bout retirement and college funding.  One approach that can ease the burden for both is to contribute to a Roth IRA.  This is a powerful tool to double as a retirement and college funding account. 

If you started funding the Roth when your child was born and you contributed $5,500 each year for 18 years, your total contributions would equal $99,000.  Consequently, if there is a net 8% return, your Roth would have grown to $205,976.34.  Since you have already paid tax on the $99,000, you can withdraw it tax free and free of any penalty, using it to pay for college tuition.  The remaining balance can continue to accumulate tax-free until you reach retirement. 

Tax-free withdrawals of your contributions from the Roth IRA are not limited to education.  You could make a down payment on a home with the $99,000 instead. 

See Frank Armstrong III, Use Your Roth IRA to Save For Both Retirement and College, Forbes, Aug. 11, 2014.


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