What happens if the beneficiary of a Coverdell ESA decides not to go to college or cannot go to college?
You have several options: the money can be kept in the account until a later date (up to age 30) in case he or she decides to pursue college at a later time. But at age 30 the funds must be withdrawn from a Coverdell account within 30 days or a 10% penalty will be assessed on the earnings. Or the funds may be rolled over to another Coverdell account for a beneficiary who is a member of the same family as the original beneficiary. You may also withdraw the funds, but the earnings will be taxed at your tax rate and there will be a 10% penalty.
Related Questions
- What happens to the money left in the account after the beneficiary has completed his/her post-secondary education or if the beneficiary decides not to attend college or does not finish college?
- What happens if the beneficiary of a Coverdell ESA decides not to go to college or cannot go to college?
- What if the beneficiary of a Coverdell ESA is a special needs beneficiary?
