Are There Age Restrictions for Beneficiaries of Coverdell Accounts?
A Coverdell account can be established for the benefit of a beneficiary under age 18. Once the beneficiary reaches age 18, you may no longer contribute to the account. This age limit does not apply to an individual with special needs. If there are unused funds remaining in the account when the beneficiary reaches age 30, they must be withdrawn within 30 days. Again, the age limit doesn’t apply to those with special needs. If the distributed funds exceed qualified education expenses, then part of the earnings included in the distribution is taxable in addition to a 10 percent penalty. If you are unable to distribute the funds to the account beneficiary, you have another alternative. Unused funds can be rolled over into a Coverdell for another eligible family member of the beneficiary or it may be maintained by changing the designated beneficiary. This individual would also have until age 30 to use the funds for qualified education expenses. How Much Can You Contribute to a Coverdell Acc
