1099-Q with sibling as beneficiary

Forum|Forum|4 years ago
March 12, 2022
4 replies
26 views

1099-Q has beneficiary of sibling of college student. This beneficiary is not in school. Can this money be used towards the student's education?

Thank you

ProSeries Professional

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Best answer by rbynaker

@Colmatt wrote:

Interesting. I assume to late to make that change for a 2021 distribution?

Yes.

rbynaker

Level 13

The money can be used for whatever the account owner wants to use it for. I suspect your real question is does it qualify as tuition and avoid penalties. No. The expenses have to be for the beneficiary to qualify. See 529(e)(3)(A) The silver lining though, the account owner can easily change the beneficiary to someone else in the same generation (such as a sibling). So follow the appropriate steps and everything turns out fine. Skip some steps and you have taxable income and a penalty.

Rick