Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheetz, I'm your host, today is Friday, August 4, 2023, and today on this Friday, as we do on any Friday, in which I can properly arrange the relevant technology, we recorded live Q&A show,

where it's just like Collin Talk Radio, you call in, ask about anything you want, raise any topic of conversation, raise any argument that you want, I always enjoy it, when you call in and argue with me about something.

I love doing that, if you'd like to join me on one of these Friday Q&A shows, you do that, but becoming a patron of the show, go to patreon.com-radicalpersonalfinance, Patreon.com-radicalpersonalfinance, sign up there to support the show, and that will give you access to one of these Friday Q&A shows.

Also, one more reminder, as we begin today's episode, consulting calls are open during the month of August, so if you like the way that I interact with people on a Friday Q&A show, but you'd like to speak with me personally, go over specific details of your situation, or perhaps just talk to me in a private way, consulting calls are open.

Radicalpersonalfinance.com-side consult, make sure also to go and sign up for the live Panama event, awesome event planned in January of 2024, come and hang out with me, and 39 other listeners of Radical Personal Finance, we're going to spend an entire week together, we'll get into all the details of your situation as much as you want.

We can talk, we can discuss, we can argue on anything that you want, expatmoney.com-radical-link in the show notes.

We begin with Mark, Mark, welcome to the show, how can I serve you today?

Hi Josh, well, long time listener, appreciate everything you do.

One of the tricks I've used, I guess, or tools I've used in the last several years is an old roll over IRA, so from a previous employment.

And so even though now I'm in another 401k and contributing steadily to that, I've got this old IRA, and as my kids entered college, and ecologyers, that three kids that went through, that roll over IRA as I learned, I could take money out of that for education expenses, penalty free.

It was a pretty important resource for me, going through those years, and although I know we generally, nobody talks much about early withdrawals from those types of accounts, as my thoughts about retirement and retirement savings have changed much, much because of your thoughts and teaching.

That's been a very good tool for me to dip into, and yet I don't hear much said about that exception for taking penalty free withdrawals.

And so I wanted to just get you to react to that a little bit and get your thoughts on the appropriateness of that.

Well, I think the reason you don't hear much said about it is simply that in general nobody wants, I don't know of a financial planner in the world who would advise somebody to take money from an IRA and use it for educational expenses.

And there's one simple reason, you can easily borrow money for college, you can't easily borrow money for retirement.

So it's not that it can't be done, obviously it is a relevant exception, you can take the money out penalty free, you can use it.

But in the priority of different goals and the ease of reaching those goals, retirement, the vast majority of people are significantly underfunded for retirement.

Retirement is a very large goal that's impossible to borrow from. And so financial planners don't want people taking money from retirement where it's productive and active and using it to pay for college expenses.

I myself would, I mean, I guess in theory, I would come up, I mean, there are certainly situations in which I would say, okay, but those situations would be simply, I've got millions and millions of dollars in my 401k, I'm well squared away for an IRA, you know, I'm well squared away for retirement.

And I just need some extra money for this kids college and for whatever reason I'm going through a temporary period of hardship, but taking money from an IRA to pay for education would be the very last thing that I myself would encourage someone to do simply because of the ease of borrowing, the ease of paying for college, either through cash flow, either on the behalf of the student or the student's parent or the ease of borrowing for college in a worst case scenario.

And all of that is preferable to taking money out of a retirement account.

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