@Rickey
Q. How would I do this on turbo tax program?
A. It can't be done using TurboTax online, because you have no educational expenses, 1098-T or scholarship info to enter.
Using the desktop/download versions, you would have to use a workaround in the forms mode. I haven't tried it, but I would think you would make an entry directly on line 6 of form 5239.
https://www.irs.gov/pub/irs-pdf/f5329.pdf
For others reading this, I should point out that Greco's full quote is "Most believe and have written that the distribution must be made in the same year that the scholarship paid for the tuition expense". “However, IRS 970 is silent as to when the money must be withdrawn. If Congress is trying to encourage 529 plans, then it makes good policy sense that the withdrawals can be made any time prior to graduation.”
Reference: https://www.investopedia.com/news/penaltyfree-way-get-529-money-back/
Although IRS Publication 970 does not directly address the issue of when the money must be withdrawn, for purposes of the penalty exception, it's clear that a "qualified distribution" must be made in the that year expenses were paid.
