Yes, you can take a distribution from your IRA for use in covering qualified education expenses. The distribution will still count as income in the year it is taken, but because the IRS would regard this as “an immediate and heavy financial need” you can avoid the 10% early distribution penalty. Qualifying expenses include tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution.
If the expenses are equal to or greater than the amount of the distribution, then usually no additional tax or penalty is due. Usually you will have to file Form 5329 (found here http://www.irs.gov/pub/irs-pdf/f532...
) to show how much, if any, of your early distribution is subject to the 10% additional tax.
Having said that, I would caution you to not draw too heavily on your retirement savings for your daughter’s education. Even though retirement is still a few years away for you, the money you withdraw will no longer be working for you, and will be hard to replace. Also, a distribution from an IRA will be counted as income and could reduce the amount of financial aid your daughter might have received. Finally, remember that your daughter likely has more years to pay back loans than you do to save for retirement.