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It doesn't matter if your income is above the allowable income limit. A child can fund their own Coverdell account. If the money in his UGMA account is in stocks or bonds, the con of this is that you would need to sell them before putting the money in a Coverdell account, thereby triggering a taxable event.

I have this money in an mm fund.

Now comes the fuzzy part. I have seen information on UGMA accounts funding 529 plans. When an UGMA funds a 529, you cannot change the beneficiary of the account and the child gains control of the account at majority age. I will guess that these same restrictions occur when an UGMA funds a Coverdell.

We have no other beneficiaries and no intention of it being for anyone but him. Majority age is 21 in our state and he will be beginning his senior year of college. He's welcome to do whatever else he'd like with the money but well understands that it would be the last money he ever saw from us. I think all 3 kids understand that the money is for college and really wouldn't consider using it for other things - particularly since our trust requires all 3 to have a bachelors degree before the money gets distributed for anything but college expenses.

Sounds like I can do it without creating any IRS concern ?

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