I am going to be going back to school in the Fall starting in August. I will not be working when I attend Nursing school for two years. I need to know the best way to handle my 401(k) and what I should do with it.
I worked for Verizon for 3 years and have just under 20k in my 401(k). I was planning on moving that into a Roth IRA to help pay for school. I have already paid off two student loans, have one that has a balance of approx 3000 and another with a balance of 1,200 which I will put into deferment, but I don't want to take out more student loans if I can help it.
I was told if I moved my 401(k) into a Roth IRA that school purposes is one reasons you can withdraw money without having to pay a tax. My first question is 1) is there any hidden tax or fee at all for withdrawing money from a Roth IRA for educational purposes?
2) I know that tuition, books and fees are covered for educational purposes. Can I take out of my Roth IRA for living expenses while I'm attending school? Rent, gas, food, etc...
3) I've read that whatever I withdraw will be considered as income the next year, and I would like to be able to apply for financial aid, but if I take out a larger number, the more I take out the more I make minimizing my chances of receiving a grant for school. Is this correct?
4) with my 401(k) being smaller, would it just be better to go ahead and cash the whole thing and just pay the tax and use it for whatever I need it for? What is the tax if I just decide to cash the whole thing in?
5) what I make now and what I made last year is a drastic difference. I made 48,000 last year and I'm not even working a full year this year but my income even if I worked a full year this year would be 25,000. Is there something I can do to help myself get grants, etc...if I will no longer be working and need financial aid?