529 guidelines for room & board withdrawals?

mamabear1234
Wed, 25 May 2011 14:05:26 +0000

6lambs - my children’s scholarships are not large enough to be taxable, but we have taken funds out of the 529 without penalty due to the scholarship. The student still owes tax on the earnings portion of the 529 withdrawal, but the penalty is waived for withdrawal of an amount equal to the scholarship. For example, she pulled out $6000, of which $1000 was earnings, so she paid tax only on that amount.