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What is a non-qualified distribution?

April 26, 2017distribution non-qualified

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What is a non-qualified distribution?

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Any distribution made by the Missouri Savings for Tuition Program (MOST, the 529 plan administered by the Missouri Higher Education Deposit Program, or any other qualified 529 plan, not used for qualified higher education expenses, must be added to the participant’s (taxpayer who made contributions to the plan) federal adjusted gross income. Early distributions (distributions not held for the minimum time established by the Missouri Higher Education Savings Program board) must be added to the participant’s federal adjusted gross income. The amount of the distribution that must be added includes contributions previously exempt from state tax and deductible earnings generated from the program (if the earnings are not already included in federal adjusted gross income). The participant is responsible for adding the non-qualified distribution amount to his/her federal adjusted gross income. If the participant is deceased, the beneficiary of the savings program must claim the non-qualified t