Consider your financial aid package. Families receiving federal financial aid need to be especially cautious about retirement account distributions. Withdrawals from 401(k)s and IRAs count as income for the year and could reduce the amount of financial aid the student qualifies for in future years. "If you're doing this during the senior year of college, it will not have an impact, but if you do it in earlier years, it can have a severe negative impact on your financial aid," says Mark Kantrowitz, publisher of FinAid.org and author of Secrets to Winning a Scholarship. "Between the taxes and the reduction in need-based financial aid, you are potentially only going to net pennies on the dollar." Try to delay retirement account withdrawals until your child's senior year of college, to ensure that their financial aid package won't be reduced.