I have $2250 in a Roth IRA that is 4-5 yrs old (not sure when it'll be five years old ). I started this at $2500 so it has lost a little money.

I will be doing a 1 year Masters program starting this September and I have to pay the first semester bill in August. I would like to use the $2250 from the ROth to pay the part of the tuition that isn't already covered by grants and loans.

Can I avoid both tax (this seems like it should be easy given that my principle has gone down and the money originally came from a contribution not a rollover) and also penalty (not sure on this one?)

So, to avoid tax and penalties, do I have to have the Roth account make the check directly to the school? Or how do I have to show that the money is used for my education? Is there a certain procedure or paperwork to demonstrate this?

THANKS!!

I don't kow about the school aspect, but if that money is your original contribution and not a conversion you may take it out at any time without penalty. Read IRS Publication 590 for further details.