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