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Good afternoon,

I'm looking for some insight into how the sunset provision of the TRA 2001 will affect my college savings.

My first child is, effectively, 20 years from college. Number two is scheduled for arrival late this summer. : ) There'll probably be a few more in the ensuing years. : ) : )

I currently have a state-sponsored 529 plan, investing solely in (essentially) the S&P 500. I'm considering adding a Coverdell ESA to this mix. My plan is to fund as much as possible of my children's respective post-secondary educational expenses through these vehicles. As I currently understand it, if I elect now to leave myself the option, I may at any time switch beneficiaries of the Coverdell, without tax consequence. I've asked the 529 administrator, and was told I could do as much with the 529.

Now, in light of the sunset provision of TRA2001, I'd like to get my mind around the consequences of the sunset provision, and the impact thereof on these savings plans.

If I understand correctly, the major changes after reverting to pre-TRA2001 will be as follows:

- No longer able to make contributions to Coverdell and 529 for same beneficiary in same year (however, I could make contributions to either a 529 or a Coverdell for each individual beneficiary).

- I will be able, in any one tax year, to use only one of the following: Hope/Lifetime Learning Credit, tax-exempt 529 withdrawal, or tax-exempt Coverdell withdrawal, as opposed to using the most advantageous combination of the above, provided for under current law.

- Other misc. benefits to the ESA go away, including contribution maximum reverting to $500/year, inability to use Coverdell funds to cover expenses other than collegiate, and some others relating to students with special needs.

Any further insight or ideas from board participants would be appreciated. Also, as I understand it, there is no “grandfather” type provision, whereby if an account is setup before the sunset provision, it may retain the preferential treatment after sunset. Can someone second that? Also, does anyone have any insight into rolling assets into a Coverdell from a 529? (as per savingforcollege.com, the opposite direction is a possibility). I've done some searching at savingforcollege.com, but didn't find a really great answer to any of these questions.

Many thanks for your insight in advance.
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