Greetings! My daughter was awarded a full college scholarship and I have no younger children so I made a distribution from the 529 account (she is a beneficiary of that account). I received form 1099-Q from Fidelity, my SSN is shown as a Recipient TIN on the form. When I enter that form into TurboTax, I see that Schedule 2 Line 8 shows 10% penalty on the Earnings amount of the distribution. Questions:
1. I was told that in the case of scholarship I should be able to make penalty free distributions up to the amount of her scholarship per year. What IRS article covers that rule?
2. More importantly, I read that I should be able to claim the penalty exception via form 5329. Where in TurboTax can I do that? That question does not come up during entering 1099-Q.
Thanks in advance for your help!
