Can I roll my existing Coverdell Education Savings Account into a 529 plan account?
Yes, subject to restrictions. Because 529 plan accounts accept only cash contributions, assets in a Coverdell account must be liquidated to accomplish the transfer. Because taking a distribution from your Coverdell account to invest in a 529 plan is considered a qualified withdrawal, it is not a taxable event for federal tax purposes. Can I choose my own investments 529 Plans offer a variety of investment options, from single funds to age-based portfolios. Please remember there’s always the potential of losing money when you invest in securities. What if I need to use the money in my 529 plan for other higher education related expenses?Assets held in a 529 Plan can be withdrawn at the discretion of the account owner. However, earnings on withdrawals to cover expenses other than qualified education expenses will be subject to taxes as ordinary income and, in most cases, a 10% federal penalty.
Related Questions
- Can I contribute to a DC College Savings Plan account and another education savings account, such as a Coverdell Education Savings Account, in the same year?
- Can I contribute to a 529 savings plan, a Coverdell Education Savings Account and a College Illinois! Prepaid Tuition Program plan at the same time?
- Can I roll over money from an UGMA/UTMA account or Coverdell Education Savings Account into a 529 account?
