Question

Funds left over from a coverdell education savings account after all education expenses are paid fo back to whom a. the account holder b. the finanicla institution c. the educational institution d .the benifiary

Answer 1

Leftover funds from a Coverdell Education Savings Account generally go back to the beneficiary, who may face taxes and penalties depending on their usage of the funds.

Step-by-step explanation:

The funds left over from a Coverdell Education Savings Account (Coverdell ESA) after all qualified education expenses are paid typically go back to the beneficiary. If the beneficiary does not need the funds for educational expenses, the remaining amount is distributed and potentially subject to tax and penalties, depending on the beneficiary's age and circumstances.

The Coverdell ESA is designed to encourage savings for education expenses. When the funds within this account exceed the amount needed for education costs, multiple options may present themselves. The account holder may change the beneficiary to another family member who can use the funds for their educational expenses, thereby avoiding taxes and penalties. Alternatively, the remaining funds can be distributed to the original beneficiary, but this could incur income tax and a 10% penalty if the beneficiary is under the age of 30 and the distribution is not a qualified expense.