Coverdell Education Savings Accounts . Jack and Katie have
five grandchildren, ages 19, 16, 15, 12, and 10. They have established
Coverdell Education Savings Accounts (CESA) for each of the grandchildren and
would like to contribute the maximum amount allowable to each CESA for the 2019
taxable year. Jack and Katie’s AGI for 2019 is $196,000.
a. How much can Jack and Katie contribute to each
grandchild’s CESA in 2019?
b. Assume that the 19-year-old granddaughter is a freshman
in college and makes a withdrawal of $7,000 from her CESA during the year 2019.
Her college expenses for 2019 were as follows:
The extra amount withdrawn was used as a down payment on a
car that the granddaugh – ter purchased during the year. She needed the car in
order to drive to school rather than having to either ride the bus or ride with
a friend. What are the tax consequences of the $7,000 distribution to the
granddaughter?
Leave a Reply