I forgot to withdraw funds from 529 in prior years for national merit scholarship. Can I withdraw funds now for prior years? (prior to 2018)
What does this mean? You forgot to withdraw funds for national merit scholarship? From your 529?
Please explain.
I will say…if you are trying to withdraw funds from your 529 to pay for costs incurred before 2018…I think you missed the boat.
If OP is asking about withdrawing non-qualified 529 funds now based on scholarships received in prior years and paying income tax on the earnings but claiming an exception for the 10% additional tax (“penalty”), than yes, the general consensus is that you can do that.
See “Mistake #6” in the linked article:
Thank you, @BelknapPoint When I withdrew funds from ESA, I got a 1099-Q, And I suppose I owe taxes on earnings portion of this non-qualified distribution (no 10% penalty). However, Schwab did not categorize Earning / Contribution as a part of distribution for ESA (I’ve never withdrawn from 529, but I believe they do specify earning/contribution portion from the distribution)…Any ideas about how to pay taxes on ESA distribution withdrawn for scholarships? Thank you!
Your first post was about taking a distribution from a 529 account based on the receipt of a scholarship, and now you have changed to taking a distribution from an ESA? Different procedures apply in determining the taxable portion. See chapter 7 in IRS pub 970: