The entire withdrawal from an IRA, whether taxable or not must be included as income on the following year's application for the Free Application for Federal Student Aid, or FAFSA. Family income does more to influence financial aid than the size of the family’s assets, and dipping into your IRA can potentially damage your child’s potential financial aid.
Check with a trained financial planner expert in financial aid strategy before you make a move. There are many such resources available on the internet. You might check with family or friends to see if any of them have used or might recommend one of these services.