Tip of the Week: IRA Withdrawals (1/25/99)

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	IRA withdrawals Financial Tip of the Week by Deloitte & Touche OnLine January 25, 1999

IRA funds can be used for a few other purposes, without penalty.

As of Jan. 1, 1998, IRA distributions before age 59½ are not subject to a 10-percent penalty if funds are used for certain education and home expenses. If the amount you withdraw pays "qualified higher education expenses" of you, your spouse, or any of your children or grandchildren, no penalty is owed. Qualified expenses include tuition, fees, books and supplies, and certain room and board expenses at post-secondary education institutions.

$10,000 may be withdrawn penalty-free if used within 120 days to buy or build a "first principal residence" of you, your spouse, or your child or grandchild. A first-time homebuyer is someone who has not had ownership interest in a principal home for two years before the new home is acquired.

These withdrawn amounts continue to be subject to regular income tax, however.

For more tips on managing your taxes and financial plan year 'round, see our Tax Planning Guide.