If you withdraw $4,000 from your SIMPLE IRA and use it all for tuition
in the same year, you can expect it to be taxed as ordinary income.
The Internal Revenue Service says "Generally, the same tax results
apply to distributions from a SIMPLE IRA as to distributions from a
Generally, if you withdraw funds from an IRA before age 59 1/2, you
pay regular income tax plus a 10% penalty tax, but you don't have to
pay the penalty tax if you use the money for "qualified higher
education expenses." Tuition is explicitly defined as a qualified
expense. There is no dollar limit on this exemption from the penalty
As that page says, you may not be exempt from the penalty tax if you
get any tax-free educational assistance. You would have to add up all
your qualified educational expenses, which may include more than
tuition, then subtract your tax-free educational assistance. This
gives you your adjusted qualified education expenses, which is the
number you can use to decrease the amount of your IRA distribution
that is subject to the penalty tax.
Article on Qualified Higher Education Expenses on the
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