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I have money saved for my son in a Coverdell Education IRA and also shares of DODBX in a UGTMA account. My son is going into 11th grade and goes to a private school. I want to take money out of one of the accounts to pay his tuition for next year. Which account would it be best to take the money from, the Coverdell Education IRA or the UGTMA account? Also, I don't want (or think I need) to pay taxes for the sale of shares because the money will be used for my son's education (a qualifying expense), so I intend to sell the exact number of shares needed to pay for his tuition. I assume that I can sell the shares, get the check, and then pay the tuition with no penalty or taxes. Is that correct? If I am audited, would the tuition bill from the private school be sufficient to show that the money is being used for his education and thus no taxes are due? Before I do anything, I want to make sure I am doing this legally. Thank you.
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