Q. Is this correct? Distributions from a 529 education plan above actual ed expenses but for the amount of the student's scholarship do not incur the 10% penalty for non-educational distribution. They are only subject to taxes on the earnings portion.
A. Yes
Q. Any 529 distribution that is more than the qualified expenses plus the scholarship amount, will be subject to the 10% penalty in addition to taxes on that amount?
A. Yes, but the tax and the penalty are only on the earnings portion of the excess (non qualified) distribution.
Q. Is there anyway take 529 distributions for the scholarship amounts from those prior years (2017-2019), so as to avoid the 10% penalty?
A. No, in my opinion (and most others). But there is disagreement on that topic. For a discussion, see this thread: https://ttlc.intuit.com/community/college-education/discussion/529-plan-withdrawals-and-prior-year-
