<p>You don’t need to report the 529 distribution because a 1099T form was filed to IRS, which will be seen by the FA people if they make an inquiry. </p>
<p>Also the 529 is reported as assets and since you took a distribution, there would be a reduction in the 529 asset base if the distribution was big enough. The IRS probably knows or probably has the capability to know that your child is in school, has a 529, that there are reasonable costs associated with school and if you do not use the 529 for school expenses there are consequences.</p>