Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?
A) Distributions made from a QTP for college tuition will be tax- free in addition to qualifying for the American Opportunity credit or lifetime learning credit.
B) Distributions can be made tax- free to pay for room and board at college.
C) Distributions of income not used for qualified higher education expenses are taxable and subject to a 10% penalty.
D) Katie's parents had established a QTP for Katie, but she has received a "full- ride" scholarship. Katie's parents can name her sister as a replacement beneficiary of the QTP.
Correct Answer:
Verified
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