Rollovers & transfers

Can I roll over money from an UGMA/UTMA account or Coverdell Education Savings Account into a 529 account?
UGMA/UTMA: You may use money from a Uniform Gifts/Transfers to Minors Account (UGMA/UTMA) to open a 529 account. The liquidation of assets currently held in the UGMA/UTMA account would generally be a taxable event.1 Note that you need to designate that the account is a custodial UGMA/UTMA account on the account application when you open the 529 plan account. UGMA/UTMA custodial accounts are subject to additional requirements and restrictions. You should contact a tax professional to determine how to transfer an existing UGMA/UTMA account and what the implications of such a transfer may be.

Coverdell ESA:
You can contribute to a 529 plan with proceeds from the sale of assets held in a Coverdell Education Savings Account. When you move money from a Coverdell account to a 529 account, you have to complete the transfer within the same calendar year to avoid a tax consequence.

Can I move money from one 529 plan to another for the same beneficiary?

Yes. You can generally perform a tax-free rollover of a 529 account for the same beneficiary as often as once every 12 months without any tax consequences. You may move money by direct rollover (money is transferred directly from your current 529 plan to a second plan) or by indirect rollover (you request a check for the amount from the current 529 plan and reinvest it in the new plan account within 60 days). Check with your current plan to verify that it will accept a request for a rollover and to determine if any penalties and/or fees will apply to the transaction. (State tax deductions or credits may be subject to recapture in the case of a non-qualified withdrawal.)


1 For more information, contact your tax advisor.