After a student graduates and takes a distribution for other purposes, would there be a 10% penalty ?
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Yes. There is a provision for using it to pay student loans; don't recall details off the top of my head other than I believe it's limited to $10k."Taxation is the price we pay for failing to build a civilized society." ~ Mark Skousen -
Only the taxable part of a distribution (not for qualified education expense) is subject to 10% penalty. The original contribution amount is tax free return of investment.
See also Pub 970. QTP can be assigned to another benficiary in the same family if desired. Also new rules allow (parrtial) rollover to Roth IRA under certain circumstances."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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