If money remains in a Coverdell Education Savings Account (ESA) when the beneficiary turns 30, the account must generally be distributed within 30 days. Any remaining earnings in that distribution become taxable to the beneficiary and may also be subject to a 10% additional tax.

To avoid taxes and penalties, families may move the funds before the beneficiary reaches age 30. The remaining balance may be:

• Rolled over to another Coverdell ESA for a qualifying family member under age 30, or
• Rolled into a 529 plan, which has no age limit.

Note: Special needs beneficiaries are exempt from the age-30 distribution requirement.