684 / Is a rollover from one education savings account to another permitted?

A rollover from one ESA to another ESA is not treated as a distribution (that would be potentially taxable) provided the beneficiaries of both ESAs are the same, or members of the same family. The new beneficiary must be under 30 years old as of the date of such distribution or change, except in the case of a special needs beneficiary.¹ The rollover contribution must be made no later than 60 days after the date of the distribution from the original ESA. However, no more than one rollover may be made from an ESA during any 12-month period.² Similarly, the beneficiary of an ESA may be changed without taxation or penalty if the new beneficiary is a member of the family of the previous ESA beneficiary and has not attained age 30 or is a special needs beneficiary.³ Transfer of an individual’s interest in an ESA can be made from one spouse to another pursuant to a divorce (or upon the death of a spouse) without changing the character of the ESA.⁴ Likewise, non-spouse survivors who acquire an original beneficiary’s interest in an ESA upon the death of the beneficiary will be treated as the original beneficiary of the ESA as long as the new beneficiary is a family member of the original beneficiary.⁵

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1. IRC § 530(b)(1).

2. IRC § 530(d)(5).

3. IRC §§ 530(b)(1), 530(d)(6).