Because of luck and our children's hard work, the 529 plans we've been contributing to literally since the day our twins were born are likely overfunded because of scholarships they have received. In my daughter's case, for example, four years of tuition/room & board etc. will run just under half of what we have saved in her 529 account.
I understand that you need to withdraw 529 funds during the calendar year they are used to pay for qualified higher education expenses. In the case of an unqualified distribution not subject to penalty (i.e. scholarship reimbursement), does the same rule about calendar year usage apply? I've read elsewhere that scholarship distributions aren't subject to specific time periods, and thus one could/should claim the full year's scholarship amount in one lump reimbursement, rather than taking it in two payments over the school year (Fall 2018 and Spring 2019). While we certainly intend to leave sufficient overage in the 529 accounts for study abroad, unexpected costs, and possible graduate school, it certainly would be nice to reclaim some funds that won't be needed. :()
I've read through any and all related threads and can't find an answer. Thanks in advance for any help!