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Coverdell ESA transfers and rollovers

Get the information you need to transfer or roll over funds into or out of a Coverdell ESA.

submit documents

Incoming transfers and rollovers

Transfers of assets and rollovers are both ways to move money from one Coverdell ESA to another. Whether the authorized person or recipient takes possession of the assets will determine the type of move and tax reporting. 

This chart compares the main differences between the types of moves.

Type of move	Process	Internal Revenue Service (IRS) tax reporting
Transfer of assets	Assets are distributed from one Coverdell ESA to another Coverdell ESA. The transfer is made from one trustee/custodian to the other, and the authorized person or recipient does not take receipt of the assets.	Transfers and rollovers are generally reportable but not taxable. Form 1099-Q will be mailed by the sending firm the year following the rollover, and Form 5498-ESA will be mailed by the receiving firm, after the tax-filing deadline. Consult a tax advisor for more information.
Direct rollover	Assets are distributed from a Coverdell ESA. The rollover distribution is paid directly to another Coverdell ESA. The authorized person or recipient does not take receipt of the assets.
Indirect rollover	Assets are distributed directly to the authorized person who is to reinvest all or part of the distribution into the receiving account within 60 days of receipt.

Type of move 

Process 

Internal Revenue Service (IRS) tax reporting

Transfer of assets 

Assets are distributed from one Coverdell ESA to another Coverdell ESA. The transfer is made from one trustee/custodian to the other, and the authorized person or recipient does not take receipt of the assets.

Transfers and rollovers are generally reportable but not taxable. Form 1099-Q will be mailed by the sending firm the year following the rollover, and Form 5498-ESA will be mailed by the receiving firm, after the tax-filing deadline.

Consult a tax advisor for more information. 

Direct rollover 

Assets are distributed from a Coverdell ESA. The rollover distribution is paid directly to another Coverdell ESA. The authorized person or recipient does not take receipt of the assets.

Indirect rollover 

Assets are distributed directly to the authorized person who is to reinvest all or part of the distribution into the receiving account within 60 days of receipt. 

Coverdell ESAs can accept transfers or rollovers only from other Coverdell ESAs, and they must be for the same recipient or a member of the recipient’s family who is under age 30. The age limitation does not apply to recipients with special needs.

Assets from other types of accounts cannot be transferred or rolled over into a Coverdell ESA. However, assets can be redeemed from another account and then invested into a Coverdell ESA, subject to the annual contribution limit. Visit Coverdell ESA contributions for additional information on current limits.

Only one Coverdell-to-Coverdell rollover per recipient is allowed per consecutive-12-month period (beginning on the date of receipt of the distribution).

There are no limits to the number of transfers.

Assets can be transferred or rolled over from an external Coverdell ESA to a CB&T Coverdell ESA if the assets are:

For the same recipient and the recipient is under age 30*
For a member of the recipient’s family who is under 30*

* The age limitation does not apply to recipients with special needs.

The following options are available:

Transfer of assets:

Contact the resigning trustee or custodian regarding their requirements to transfer the funds to CB&T.

If	Then
The resigning custodian requires their own transfer forms	Instruct them to mail us a check payable to Capital Bank and Trust Company and include: The name of the authorized person and recipient The Capital Group account number Contact us to provide us with investment instructions for the incoming funds
The resigning custodian will accept CB&T’s forms	Submit the Coverdell ESA Request for Transfer of Assets so CB&T can request the funds

Then 

The resigning custodian requires their own transfer forms

Instruct them to mail us a check payable to Capital Bank and Trust Company and include:

The name of the authorized person and recipient
The Capital Group account number

Contact us to provide us with investment instructions for the incoming funds

The resigning custodian will accept CB&T’s forms

Submit the Coverdell ESA Request for Transfer of Assets so CB&T can request the funds

If the receiving account is new, complete the Coverdell ESA application. Make sure that the account is established before a check is mailed to us. If CB&T receives the check before the account is established, it may be returned.

Direct rollover:

The authorized person should contact the resigning trustee or custodian to ensure their rollover requirements are met
Checks should be payable to Capital Bank and Trust Company and include the authorized person and the recipient’s name and account number
Contact us to provide investment instructions for the incoming funds

If the receiving account is new, complete the Coverdell ESA application. Make sure that the account is established before a check is mailed. If CB&T receives the check before the account is established, it may be returned.

Indirect rollover:

If the proceeds are issued directly to the authorized person or beneficiary, the authorized person must send a check payable to Capital Bank and Trust Company.

If the receiving account exists, complete the Coverdell ESA Request for Transfer of Assets and mail it to CB&T with the check.

If the receiving account is new, mail the check with the Coverdell ESA application.

Incoming rollover and indirect rollover requests that include a check are generally processed the same business day if all the necessary documentation is received.

Incoming transfer requests that do not include a check are processed within 1-3 days after all the necessary documentation is received.

The request is then sent to the resigning institution for a transfer of funds. Processing time varies based on the firm; however, if the assets are not received within 30 days, a second system-generated request is sent.

To avoid delays, contact the resigning firm prior to submitting the transfer request to ensure their requirements will be met
If the resigning firm has not sent the distribution check after the second request, the authorized person should contact the resigning trustee to inquire on the status

Distributions may be delayed or rejected if the resigning trustee needs additional information.

Outgoing transfers and rollovers

Accounts	Move type
Coverdell ESA (for the same recipient or a family member under age 30)	Transfer of assets, rollover (indirect or direct)*
CollegeAmerica (for the same recipient)	Transfer of assets

* For rollovers, amounts must be placed into an account for the same recipient or eligible family member within 60 days after the date of the distribution.

The accepting custodian’s or trustee’s transfer of assets form is required. A signature guarantee may be required. Review Signature guarantee for more information.

A Coverdell ESA may be transferred or rolled over to another Coverdell ESA for:

The same recipient
A member of the recipient’s family if the family member is also under age 30

Note: The age limitation does not apply to recipients with special needs. For help determining whether a recipient meets the criteria for a special needs individual, consult a tax advisor.

The accepting custodian’s or trustee’s transfer of assets form is required. A signature guarantee may be required.

The distribution from the Coverdell ESA is reported on Form 1099-Q. The transaction is not a taxable event, nor is it subject to the 10% IRS penalty if all of the assets are invested in the 529 account in the same calendar year. If not, the earnings on the distribution are taxable and a 10% excise tax could apply to the earnings.

The authorized person should maintain the transaction statement as evidence the transfer was made in the calendar year.

Moving money from CB&T to a CollegeAmerica account

Complete the Coverdell ESA Distribution Request. If the CollegeAmerica account is new, also complete the CollegeAmerica Account Application. The transfer is reportable on Form 1099-Q; however, the transaction is not a taxable event, nor is it subject to the 10% IRS penalty.

A signature guarantee is required:

For distributions over $125,000
If the Coverdell ESA authorized person is not the owner of the CollegeAmerica account
If the Coverdell ESA recipient is not the beneficiary of the CollegeAmerica account

An authorized person or recipient may reinvest all or part of a Coverdell ESA distribution as a rollover back into a Coverdell ESA within 60 calendar days of the date of receipt. Only one rollover per recipient is allowed per consecutive-12-month period. After 60 days, the reinvestment is considered a personal contribution, subject to Coverdell ESA limits and deadlines.

Return to Coverdell ESA >

Contact us

Have questions or need additional support?
Contact us 8:00 a.m. to 7:00 p.m. ET, Monday through Friday.

(800) 421-0180

For financial professionals only. Not for use with the public.

All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.

Use of this website is intended for U.S. residents only.

The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.

Financial professionals should always contact their back office to determine if there are any restrictions on the use of American Funds products, tools, services, websites and literature.

CollegeAmerica is distributed by Capital Client Group, Inc. and sold through unaffiliated intermediaries.

Depending on your state of residence, there may be an in-state plan that provides state tax and other state benefits, such as financial aid, scholarship funds and protection from creditors, not available through CollegeAmerica. Before investing in any state’s 529 plan, investors should consult a tax advisor.

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Coverdell ESA transfers and rollovers

Incoming transfers and rollovers

Outgoing transfers and rollovers

Moving money from CB&T to a CollegeAmerica account

Return to Coverdell ESA >

Contact us

Have questions or need additional support?
Contact us 8:00 a.m. to 7:00 p.m. ET, Monday through Friday.

(800) 421-0180

Investments

RESOURCES & RESEARCH

PORTFOLIO SOLUTIONS

MORE OFFERINGS

OUR APPROACH

Insights

Capital Ideas Pro™: Access to special events, courses and consulting to help you grow.

CATEGORIES

FEATURED

LEARNING CENTER

Tools & Resources

CLIENT ACCOUNT SUPPORT

INVESTMENT TOOLS

RETIREMENT PLANS

About Us

Coverdell ESA transfers and rollovers

Incoming transfers and rollovers

What is the difference between a transfer of assets and a rollover?

What account types can be transferred or rolled over into a Coverdell ESA?

What are the annual limits for Coverdell ESA transfers and rollovers?

What are the requirements to move an external Coverdell ESA into a Capital Bank and Trust Company (CB&T) Coverdell ESA?

How long does it take to process a transfer or rollover request?

Outgoing transfers and rollovers

What account types can a Coverdell ESA be transferred or rolled over into?

What are the requirements for transferring or rolling over from a CB&T Coverdell ESA to a Coverdell ESA with another company?

What are the requirements to move assets from a CB&T Coverdell ESA to a 529 account with another company?

Moving money from CB&T to a CollegeAmerica account

What are the requirements to transfer a CB&T Coverdell ESA to a CollegeAmerica account?

Can assets from a distribution be reinvested back into the same account without a sales charge?

Return to Coverdell ESA >

Contact us

Have questions or need additional support? Contact us 8:00 a.m. to 7:00 p.m. ET, Monday through Friday.

(800) 421-0180

Capital Ideas Pro™:Access to special events, courses and consulting to help you grow.

Have questions or need additional support?
Contact us 8:00 a.m. to 7:00 p.m. ET, Monday through Friday.