I have a 529 plan set up for my adult child which has grown in value. I am the “participant” and my adult child is the “beneficiary.” The account has grown in value. I am going to cash out the entire account and take a nonqualified distribution. Could you please confirm or correct the following:
* I believe the distribution is reported under the beneficiary’s SSN, therefore any tax owed on the earnings would be at the beneficiary’s (lower) tax rate not mine
* The tax rate is the beneficiary’s marginal tax rate + 10% on the earnings.
Thanks!