A traditional IRA can be withdrawn penalty-free and possibly tax-free to pay for college costs.

A traditional IRA can be withdrawn penalty-free and possibly tax-free to pay for college costs. Alternatively, if the IRA funds are not needed for college, a student can elect to convert to a Roth IRA during college years. The Hope or Lifetime Learning tax credit may offset the taxable income generated by the IRA liquidation or by the conversion to a Roth IRA.