Here is my game plan:

- I currently have $5045.00 from a contribution I made to a regular IRA in 2008.
- I plan on contributing $5000.00 - the limit - for 2009.

Therefore, in total, I would have at least $10,045 sitting in a regular IRA account.

I plan on not working 2010 - 2012 to go to school to get my master's degree.

I plan on taking a distribution (getting my money out my IRA account) during those years to pay for "qualified educational expenses." I understand that, if I use the money to pay for qualified educational expense, I'm exempt from a 10% penalty. I'm also understanding that I will not be paying any tax on the full $10,045 ,if I take the distribution during my unemployed years, since the amount is too low to be taxed anyway. Please let me know if my understanding of the tax issue is correct before I fund my account for the 2009 tax year.

Thank you so much Guys!

Yes, this sounds about right. The standard deduction for single filers will be $5,350. Assuming you are single, you may want to withdraw $5,350 in 2010 and the rest in 2011 to avoid taxes completely

Thank you guys for your help! Had I known several years ago, I wish I could have contributed the (2004 - 2007) previous years! Thanks again for your help!

If you can afford it, you would be better off converting to a Roth IRA during your low-income years. Future growth of the $10,000 would then be tax-free.