The federal tax rules for 529 withdrawals are covered by IRS Publication 970. I read Chapter 8, “Figuring the Taxable Portion of a Distribution” as suggesting it may be necessary in at least some situations to do the withdrawal for a scholarship in the same tax year. They calculate the taxable portion of the 529 withdrawals taken in a given tax year by subtracting the withdrawal amount from the adjusted qualified educational expenses for the tax year. In calculating adjusted QEE, you subtract the amount of any nontaxable scholarship. So if you wait too long and then take the whole scholarship amount in one year, you could end up with an unnecessary tax. I am not an accountant, so people should check this for themselves. The timing issues for 529s are tricky. I was only checking this point because I realized I made a mistake in not withdrawing funds from my daughter’s account last year. She is in an online high school and I wasn’t sure whether this falls under the new rules permitting withdrawals for pre-college tuition. By the time I realized it does, it was too late.