Specific Instructions for Form 5498-ESA
File Form 5498-ESA, Coverdell ESA Contribution Information, with the IRS by June 2, 2008, for each person for whom you maintained
any Coverdell
education savings account (ESA) during 2007.
A Coverdell education savings account is a trust or custodial account created or organized in the United States exclusively
for the purpose of
paying the qualified education expenses of an individual who is the designated beneficiary of the trust. The account must
be designated as a Coverdell
ESA at the time it is created or organized in order to be treated as a Coverdell ESA for tax purposes. The governing instrument
creating the trust
must meet the requirements of section 530(b)(1).
Contributions.
You must report contributions, including rollover contributions, to any Coverdell ESA on Form 5498-ESA. See the instructions
under Boxes 1 and 2.
If no reportable contributions were made for 2007, no return is required.
For contributions made between January 1, 2008, and April 15, 2008, trustees and issuers should obtain the participant's
designation for the year
that the contributions are made.
Transfers.
Report on Form 5498-ESA all rollovers including a direct trustee-to-trustee transfer from one Coverdell ESA to another
Coverdell ESA. A rollover
can be made from certain U.S. Savings Bonds or another Coverdell ESA. Any amount distributed from a Coverdell ESA may be rolled
over to another
Coverdell ESA and is not taxable if it is for the benefit of the same beneficiary or certain family members (see below).
Total distribution, no contributions.
Generally, if a total distribution was made from an account during the year and no contributions including rollovers
were made for that year, you
do not need to file Form 5498-ESA.
Distributions.
Report distributions from any Coverdell ESA on Form 1099-Q, Payments From Qualified Education Programs (Under Sections
529 and 530). Any change in
the beneficiary of the Coverdell ESA is not treated as a distribution if the new beneficiary is a family member (see below)
of the prior beneficiary
and has not reached the age of 30 (except for a beneficiary with special needs).
Family member.
A family member of the designated beneficiary includes his or her spouse, children and their descendants, stepchildren
and their descendants,
siblings and their children, parents and grandparents, stepparents, and their spouses. It also includes the first cousins
of the designated
beneficiary.
Statements to participants.
If you are required to file Form 5498-ESA, you must provide a statement to the beneficiary (participant) by April
30, 2008.
For more information about the requirement to furnish statements to participants, see part M in the 2007 General Instructions
for Forms 1099, 1098,
5498, and W-2G.
Account number.
The account number is required if you have multiple accounts for a recipient for whom you are filing more than one
Form 5498-ESA. Additionally, the
IRS encourages you to designate an account number for all Forms 5498-ESA that you file. See part L in the 2007 General Instructions
for Forms 1099,
1098, 5498, and W-2G.
Box 1. Contributions (Other Than Amounts in Box 2)
Enter contributions to a Coverdell ESA made in 2007 and through April 15, 2008, designated for 2007.
Do not include rollovers in box 1. Report rollovers in
box 2.
Box 2. Rollover Contributions
Enter any rollover contributions (including trustee-to-trustee transfers) to this Coverdell ESA received by you during 2007
(see Transfers
above).
