Each of my children earned scholarships in prior tax years (one is merit scholarship, and the other is financial aid but which is reported by the school as scholarship), but we did not do a distribution from their 529 accounts for those amounts in the years the scholarships were earned. Can we still do distributions of those amounts (to either us or the beneficiaries) without penalty in the future? My understanding is that there is no express IRS guidance on the issue of timing on scholarship-related 529 withdrawals.
