Maurice has been saving for his daughter's college expenses using a 529 plan. Since opening the account 9 years ago, Maurice has accumulated $80,000 in the plan. His daughter needs only $70,000 to pay for college expenses. If Maurice takes the remaining $10,000 as a distribution to fund a graduation trip for his daughter, what will happen? Because he is using the money for his daughter's expenses, Maurice will not owe state or federal tax. Because the distribution is not qualified, Maurice will owe federal taxes on the portion of the $10,000 distributions that represent earnings from his investments, plus a 10% federal tax penalty on the earnings distributed. Maurice will pay a 10% penalty on the $10,000 but because the distribution represents his contribution, no state or federal tax will be due. Maurice may roll over the $10,000 into a Roth IRA and avoid all federal and state taxes