Withdrawing early from an IRA to repay a former employer who originally paid for my MBA program

edrossi4 · #1 (**permalink**) 10-07-2015, 11:35 PM

My former employer covered the full cost of my MBA program, approx $25K, over the course of 2.5 years. Just before graduation, I received a job offer with a new company that was too good to turn down, so left my original company. Per the agreement I signed, I now owe my former employer the total sum of $25K.

MY QUESTION - If I withdraw money early from an IRA and use it to pay back my former employer the amount they spent on my MBA, can I get exempted from paying the 10% early withdrawal fee?

The institution I received my MBA program is fully accredited and satisfies all requirements of the exemption. I have records of the cost of the program and of the payments to my former employer.

Thanks for the help!

Wnhough · #2 (**permalink**) 10-08-2015, 01:02 AM

Quote:

Originally Posted by edrossi4

My former employer covered the full cost of my MBA program, approx $25
MY QUESTION - If I withdraw money early from an IRA and use it to pay back my former employer the amount they spent on my MBA, can I get exempted from paying the 10% early withdrawal fee?

The institution I received my MBA program is fully accredited and satisfies all requirements of the exemption. I have records of the cost of the program and of the payments to my former employer.

Thanks for the help!

You won’t pay a penalty if you use the money to pay qualified higher-education expenses ,i.e.,Tuition;Fees; Books; Room and board. This distribution is taxed at your ordinary income rate, but there won’t be a penalty.you may show a copy of 1098T , copies of edu expenses or receipts canceled checks, credit card transaction records and bills can be sufficient proof of an expense..