Withdrawals or distributions to the account owner are not income but a conversion
of a resource (i.e. the resource in a different form). The distribution is a countable
resource to the account owner.
Assume that any distribution the designated beneficiary receives from a QTP is a gift,
unless there is evidence to the contrary (e.g. there is an allegation that the distribution
must be repaid). Distributions, which meet the definition of a gift and are used for
educational expenses of the designated beneficiary, are excluded as income in the
month of receipt.
If an excluded distribution is retained into the month following the month of receipt,
it is an excluded resource of the designated beneficiary for 9 months beginning with
the month after the month of receipt. For information on educational gifts, see SI 00830.455 and SI 01130.455.
If the designated beneficiary spends any portion of a QTP distribution for a purpose
other than his or her educational expenses or no longer intends to use the funds for
his or her educational expenses, the funds are income at the earlier of two points:
in the month the funds are spent; or
in the month the individual no longer intends to use the funds for educational expenses.
If a countable distribution is retained into the month following the month of receipt,
it is a countable resource.