Common use of Nonqualifying Distributions Clause in Contracts

Nonqualifying Distributions. If a designated beneficiary withdraws amounts from a Xxxxxxxxx ESA that exceed the qualified education expenses for the same year, or the distributions are not used for qualified education expenses, a portion of the distributions will be taxable. The amount in excess of the qualified education expenses is taxable pro rata, based on the earnings and the basis in the account. In most cases of a nonqualified distribution, the taxable portion of a Xxxxxxxxx ESA distribution is also subject to an additional 10 percent penalty tax. There are several exceptions to the 10 percent penalty tax including distributions made payable a. to a designated death beneficiary of the Xxxxxxxxx ESA or to the estate of the designated beneficiary following the death of the designated beneficiary; b. to the designated beneficiary if the designated beneficiary is disabled; c. to the designated beneficiary if the designated beneficiary received a qualified scholarship, an educational assistance allowance or an excludable payment exception, but only to the extent the distribution is not more than the amount of the scholarship, allowance or excludable payment, and d. to the designated beneficiary as a removal of excess along with the net income attributable.

Nonqualifying Distributions. If a designated beneficiary Designated Beneficiary withdraws amounts from a Xxxxxxxxx ESA that which exceed the qualified education expenses for the same year, or the distributions are not used for qualified education expenses, a portion of the distributions will be taxable. The amount in excess of the qualified education expenses is taxable pro rata, based on the earnings and the basis in the account. In most cases of a nonqualified distribution, the taxable portion of a Xxxxxxxxx ESA distribution is also subject to an additional 10 percent penalty tax. There are several exceptions to the 10 percent penalty tax including distributions made payable a. to a designated death beneficiary of the Xxxxxxxxx ESA or to the estate of the designated beneficiary Designated Beneficiary following the death of the designated beneficiaryDesignated Beneficiary; b. to the designated beneficiary Designated Beneficiary if the designated beneficiary Designated Beneficiary is disabled; c. to the designated beneficiary Designated Beneficiary if the designated beneficiary Designated Beneficiary received a qualified scholarship, an educational assistance allowance or an excludable payment exception, but only to the extent the distribution is not more than the amount of the scholarship, allowance or excludable payment, and d. to the designated beneficiary Designated Beneficiary as a removal of excess along with the net income attributable.

Nonqualifying Distributions. If a designated beneficiary Designated Beneficiary withdraws amounts from a Xxxxxxxxx ESA that exceed the qualified education expenses for the same year, or the distributions are not used for qualified education expenses, a portion of the distributions will be taxable. The amount in excess of the qualified education expenses is taxable pro rata, based on the earnings and the basis in the account. In most cases of a nonqualified distribution, the taxable portion of a Xxxxxxxxx ESA distribution is also subject to an additional 10 percent penalty tax. There are several exceptions to the 10 percent penalty tax tax, including distributions made payable: a. to a designated death beneficiary of the Xxxxxxxxx ESA or to the estate of the designated beneficiary Designated Beneficiary following the death of the designated beneficiaryDesignated Beneficiary; b. to the designated beneficiary Designated Beneficiary if the designated beneficiary Designated Beneficiary is disabled; c. to the designated beneficiary Designated Beneficiary if the designated beneficiary Designated Beneficiary received a qualified scholarship, an educational assistance allowance allowance, or an excludable payment exception, but only to the extent the distribution is not more than the amount of the scholarship, allowance allowance, or excludable payment, ; and d. to the designated beneficiary Designated Beneficiary as a removal of excess along with the net income attributable.

Nonqualifying Distributions. If a designated beneficiary withdraws amounts from a Xxxxxxxxx ESA that exceed the qualified education expenses ex- penses for the same year, or the distributions are not used for qualified education expenses, a portion of the distributions will be taxable. The amount in excess of the qualified education expenses is taxable pro rata, based on the earnings and the basis in the account. In most cases of a nonqualified distribution, the taxable portion of a Xxxxxxxxx ESA distribution is also subject to an additional 10 percent penalty tax. There are several exceptions to the 10 percent penalty tax including distributions made payable a. to a designated death beneficiary of the Xxxxxxxxx ESA or to the estate of the designated beneficiary following the death of the designated desig- nated beneficiary; b. to the designated beneficiary if the designated beneficiary is disableddis- abled; c. to the designated beneficiary if the designated beneficiary received a qualified scholarship, an educational assistance allowance or an excludable payment exception, but only to the extent the distribution is not more than the amount of the scholarship, allowance or excludable exclud- able payment, and d. to the designated beneficiary as a removal of excess along with the net income attributable.