My son is graduating this term and I want to liquidate his remaining 529 funds--approx $14000. He has had scholarships each year to the tune of about $20000. I know I have to pay taxes on the earnings that I will withdraw, but should not have to pay a penalty b/c of the scholarship offset. How do I actually withdraw the funds? Do I just do so, and then I would remit the required tax next year on my taxes, but be able to not pay the penalty? What kind of paperwork do I have to have to show this? Thanks.