AboutHelen P. O`Planick, EA Expertise I am a tax professional, with experience in individual taxation. I would prefer not to answer questions about non-resident aliens or corporate taxation. Please do not ask me state related questions, unless the state is Pennsylvania. There are 42 taxing states and 42 TOTALLY different sets of state tax law.
Experience I have been preparing tax returns almost all my life. I have been in professional practice for 25 years and I am enrolled to practice before the Internal Revenue Service.
Organizations National Association of Enrolled Agents
Publications I am a prior Money Magazine Tax Test taker and have been quoted extensively in all media including monthly periodicals and books by tax authorities.
Question My friend is custodian for his 21-yr old daughter's UTMA plan in an annuity which surrenders this month. Can the IRS 10% penalty be waived when using the proceeds of sale for college expenses? At purchase he didn't know about the under 59 1/2 IRS 10% penalty, and she is 21.
Thanks
Answer Please have your friend get better investing advice. An annuity for a child is really really wrong.
Saying that, as long as it is a qualified retirement plan, yes, he can use it for her education and not pay the penalty. Taxes of course will be due.
