Can I/we take money out of a Simple IRA at work (spouse)and use it for my Graduate Schooling? Even under 2yrs?

Question

My spouse's work is setting up a simple IRA for work. It will be 100 percent matched up to 3% of her salary, and vested instantly. Unfortunately I will be going on rotations for school soon, and we will be moving away from the area. So the total amount that she will be putting away will be roughly $800 (which will be matched to 1600) We dont really like any of the investment choices, and the administrating company will be charging a fee, as well as the fund where the money is put. We would rather use it for my school bill next year (which runs about about 27,000yr not including living expenses) and use money that we would have put into the school bill to open her a retirement account (probably a roth, we dont make enough to get even close to having the money to be putting the max away). Can this be done without any penalty (i.e. the extra 10% surcharge taken on early disbursements) Can the company someone-how keep us from withdrawing the money if we dont keep it for 2 yrs? Thanks all!!

http://www.irs.gov/publications/p970/ch09.html

I know that I can do it, I just want to know if there is any type of time limit, or some kind of proof of need etc.

Answer 1

There is no rule or law that states that you must keep an IRS with the company after you leave it. You could transfer it to a bank and open an IRA CD or take it to a mutual fund. They have a direct transfer which would avoid the 10% surcharge. There is a possibility of a withdraw without penalty for education, but I recommend talking to a tax professional before deciding your next course of action. I have included some readings. Good luck!

Answer 2

If you take money out of a retirement plan for any reason short of natural disaster or other exceedingly traumatic event, you'll be socked with an early-withdrawal fee and have to pay taxes on the balance. Unless your grad school is inside the eye of a class 4 hurricane, I doubt the IRS is gonna let you get away with that one...

Answer 3

I don't think you are going to be able to cash this in without a penalty. I'm not an expert but from what I understand you will have to pay a penalty. You could roll your wifes employer plan into another qualified plan (like a roth ira) with no penalities.

Answer 4

I just got my student loan from this website http://1nk.us/studentloan1 . I got a 4.5% fixed rate for life, and my payments are only $50/mo. They can also consolidate your existing loans. The whole process only took me like 3 minutes