How to Transfer a Coverdell Education Savings Account Into a 529 Plan

There are an infinite amount of investment options to save for a student's college education, it's no wonder the choices overwhelm many. If you chose to invest in a Coverdell Education Savings Account (ESA) and are no longer satisfied with that choice, transfer those funds. Roll the savings into a 529 College Savings Plan.

Instructions

Difficulty: Moderate

Things You’ll Need:

• Rollover form from 529 college savings plan institution
• Coverdell ESA cash out check
• Coverdell ESA account statement
• Coverdell ESA cost basis and earning figures

1. Set up an appointment with a personal banker or financial advisor to guide your research about the 529 College Savings Plan. Select the option to cash out the ESA account. Inquire with that institution about the proper forms required to make the transfer of funds from a Coverdell ESA.
2. Contact the financial institution that holds the Coverdell ESA first, to confirm the value and second, to cash out the account. Inform them that the funds are to be deposited into a 529 College Savings Plan.
3. Complete the necessary forms to cash out the ESA account. Receive the cashed out Coverdell ESA check.
4. Gather the most recent Coverdell ESA account statement and the cost basis and earnings for the account. Send along with the check and the required rollover forms to the 529 College Savings Plan financial institution.
5. Confirm the completion of a successful transaction.

Tips & Warnings

• It is sometimes possible to transfer a Coverdell ESA into a 529 College Savings Plan within the same financial institution. Ask. This may eliminate steps from the process.
• An investor may access account cost basis and earning figures through the financial institution that holds the account.
• The transfer process must be completed within 60 days and the same calendar year from Coverdell close out to 529 College Savings Plan investment.
• In order not incur tax penalties, the Coverdell funds must transfer into a 529 College Savings Plan with at least one similar owner whether it's the student or custodian.

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