Which of the following statements regarding the qualified tuition plans (QTP) is incorrect?
A) Distributions can be made tax-free to pay for room and board at college.
B) 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.
C) 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.
D) Distributions of income not used for qualified higher education expenses are taxable and subject to a 10% penalty.
Correct Answer:
Verified
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