My 18 year old daughter will be entering a university and community college simultaneously. I had a Coverdell ESA that I wanted to use for tuition, room & board, and a computer for her. I went to the bank and accidentally closed the ESA and received a cashier's check for the entire account. (They asked, "Do you want to disburse the funds?" I answered, "yes," but I didn't realize they meant the entire account and closed the account.) I will need to redeposit (or rollover) the unused portion of the funds within 60 days to avoid the penalty, but in the meantime I need to pay for the higher education expenses.
- Do I need to deposit the cashier's check into a bank account in order to track the expenditures? Should it be a new or existing bank account? Or can I cash the check and just keep receipts? Basically I'm concerned with proving all of the higher education expenses and that I redeposited the unused amount into another ESA.
- I have already paid the tuition for the community college as it was due before I was ready to withdraw from the ESA. Can I just keep or transfer that amount from the ESA into my personal bank account? Or is there more to it?
- I accidentally contributed $100 to the ESA after my daughter turned 18, so the excess contribution is subject to a 6% penalty. Is it possible to rollover the excess amount into an ESA for my son (14)? Is it worth it to roll it over or a lot of hassle?
- The unused funds need to be rolled over into another ESA, however my daughter is now 18. Is it possible to rollover into an ESA for her, or will I not be able to open an ESA for her since she is now 18? Will I have to roll it over into an ESA for my son then?