Taking a withdrawal from 529 account due to scholarship

[L0915]

I know that we can take a withdrawal from my daughter's 529 account with no penalty (taxes to be paid on earnings) to compensate for a scholarship she was awarded. My question is - does the withdrawal have to occur in the same year the scholarship was received? My daughter is a senior and I only realized we could do this earlier this year but she has received scholarships her entire four years of school. Can we take a withdrawal now without penalty for a scholarship she received in a prior year?

[Anonymous_]

I will page @Hal_Al 

[Hal_Al · Accepted solution]

Q. Does the withdrawal have to occur in the same year the scholarship was received, to qualify for the penalty exception? 

A. Yes. 

Q. Can we take a withdrawal now without penalty for a scholarship she received in a prior year?

A. No.

For more discussion, on this topic,  including an opinion that you can claim the exception, see this old thread:

https://ttlc.intuit.com/community/college-education/discussion/529-plan-withdrawals-and-prior-year-s...