Message Font: Serif | Sans-Serif
No. of Recommendations: 2
I have money saved for my son in a Coverdell Education IRA and also shares of DODBX in a UGTMA account.

I'm going to stop you here since your questions about the Coverdell indicate that you know nothing about how they work. Please get yourself a copy of IRS Publication 970 and devour Chapter 7. After that holler back if something is unclear.

The UGTMA account is your son's money. There is no tax benefit to his using this for secondary school tuition. Any capital gain or loss on the sale creating the cash would be reported like any other sale on his Schedule D. (I'm assuming that this would be an allowable use of money from this account, but that's not a tax law question, and I'm not a lawyer.)

From a purely tax perspective using money from the Coverdell is better since as long as you don't withdraw more than the qualified expenses there is no tax liability.

Rule Your Retirement Home Fool
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.