I have an IRA through my company's 401(k) plan. Its value is around 35K. I am planning to begin graduate school this fall and want/need to tap into the fund to supplement loans for expenses. My questions are:

Rolling this 401(k) to a standard IRA and then to a Roth IRA will not push me over the 28% tax bracket for income in 1999. So, I roughly estimate about a $9800 tax that will be due for converting this 35K IRA to a Roth. Is this correct?

Once this is converted, can I somehow withdrawl money from the principal amount for educational expenses and not have to pay the 10% early withdrawl penalty?

Who collects this 10% early withdrawl penalty anyway? The IRS, or the company the account is with?

If anyone can help, I would appreciate it.


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Matt