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I recently closed a very small Coverdell account for my college frosh son. When I got the check it was pay to the order [how the account was titled] which left me wondering what to do with it. I ended up endorsing it :Pay to son's college and signing it[the way the account was titled] and sent it to the college to apply to his account. (I cleared this with them beforehand.)

The account closing statement came later with this all noted as "premature distribution."

Should I be concerned about the closing statement note ?


Nah. I took a quick look at Pub 970 and can't find any information about reporting Coverdell withdrawals, but it does give instructions for calculating any taxable amount and how to report that and the penalty on it. As long as none of it is going to be taxable, don't fret about the wording. I'm not sure what the custodian is going to issue, if anything, during 1099 season, but there's time to deal with that if and when it's an issue.

Phil Marti
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