ESA Distribution Inquiry
Hello,
I have a client with an ESA for their 18 year old that no longer needs the ESA account. There are younger siblings that my client now wants to open up ESA’s with the same custodian for them and split the existing ESA. Would this be consider a “non-reportable” transfer.
Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2025-04-07 18:09
If done by direct transfer to another eligible beneficiary (not over 30 unless special needs), there is no reported distribution. However, if for some reason the ESA custodian will not do transfers, a distribution can be taken and a 60 day rollover done to the new beneficiary’s ESA. Because only one such rollover is allowed over 12 months, a single distribution of the total amount should be done and the rollovers to other beneficiaries ESA must be completed within 60 days.