Fillable ESA Simplifier COVERDELL EDUCATION SAVINGS ACCOUNT APPLICATION (Georgia's Own Credit Union)

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ESA Simplifier COVERDELL EDUCATION SAVINGS ACCOUNT APPLICATION (Georgia's Own Credit Union)

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Page 1 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
PART 1. DESIGNATED BENEFICIARY
The individual for whom this account is being established
Name (First/MI/Last) __________________________________________
Address Line 1 _______________________________________________
Address Line 2 _______________________________________________
City/State/ZIP ________________________________________________
Social Security Number ________________________________________
Date of Birth _________________________________________________
Account Number _____________________________________________
PART 2. COVERDELL ESA TRUSTEE
To be completed by the Coverdell ESA trustee
Name ______________________________________________________
Address Line 1 _______________________________________________
Address Line 2 _______________________________________________
City/State/ZIP ________________________________________________
Phone ________________________ Organizaon Number ___________
ThisisanamendmenttoanexisngCoverdellESA.
This Coverdell ESA contains managed investments as described in
theTrusteeManagementofInvestmentseconoftheagreement.
PART 6. CONTRIBUTION INFORMATION
Contribuon Amount ____________________________ Contribuon Date ________________
CONTRIBUTION TYPE (Select one)
1. Regular
Contribuon for Tax Year _________
2. Rollover (DistribuonfromaCoverdellESAthatisbeingdepositedintothisCoverdellESA)
By selecng this transacon, I irrevocably designate this contribuon as a rollover.
3. Transfer (Direct movement of assets from a Coverdell ESA into this Coverdell ESA)
COVERDELL EDUCATION SAVINGS ACCOUNT APPLICATION
Simplifier®
COVERDELL
ESA
PART 3. GRANTOR
The individual establishing this account
Name (First/MI/Last) __________________________________________
Address Line 1 _______________________________________________
Address Line 2 _______________________________________________
City/State/ZIP ________________________________________________
Social Security Number ________________________________________
Date of Birth ____________________ Phone ______________________
PART 4. RESPONSIBLE INDIVIDUAL
The individual responsible for managing this account
Name (First/MI/Last) __________________________________________
Address Line 1 _______________________________________________
Address Line 2 _______________________________________________
City/State/ZIP ________________________________________________
Social Security Number ________________________________________
Phone ______________________________________________________
Relaonship to Designated Beneciary ____________________________
Email _______________________________________________________
ELECTIONS (Selectananswertoeachofthefollowingquesons.Ifabox
isnotcheckedforaqueson,“No”willapply.)
Yes No Will the responsible individual connue to serve as the
responsible individual for the trust aer the designated
beneciary aains the age of majority under state law
and unl such me as all assets have been distributed
from the trust and the trust terminates? (SeeArcleVof
theagreementforaddionalinformaon.)
If the responsible individual becomes incapacitated or
dies aer the designated beneciary reaches the age of
majority under state law, the responsible individual shall
be the designated beneciary.
Yes No May the responsible individual change the beneciary
designated under this agreement to another member of
the designated beneciary’s family described in Code
secon 529(e)(2) in accordance with the trustee’s
procedures?
PART 5. SUCCESSOR RESPONSIBLE INDIVIDUAL
In the event of the death or legal incapacity of the responsible individual
while the designated beneciary is a minor under state law, the individual
named below is designated as the successor responsible individual.
No successor responsible individual will be named at this me. The
responsible individual may designate a successor responsible individual
at a later date.
Name (First/MI/Last) __________________________________________
Address Line 1 _______________________________________________
Address Line 2 _______________________________________________
City/State/ZIP ________________________________________________
Social Security Number ________________________________________
Phone ______________________________________________________
Relaonship to Designated Beneciary ____________________________
Email _______________________________________________________
Page 2 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
Checkhereifaddionaldeathbeneciariesarelistedonanaachedaddendum. Total number of addendums aached to this Coverdell ESA ________
PART 8. DEATH BENEFICIARY DESIGNATION
Upon the designated beneciary’s death, the assets in this account will be paid to the death beneciaries named below. The interest of any death
beneciary that predeceases the designated beneciary terminates completely. If all primary death beneciaries predecease the designated
beneciary, the balance in the account will be payable to the conngent death beneciaries. If no death beneciaries are named, the designated
beneciary’s estate will be the death beneciary.
No death beneciaries are designated at this me. The responsible individual may designate death beneciaries at a later date.
PRIMARY DEATH BENEFICIARY
Name ______________________________________________________
Address ____________________________________________________
City/State/ZIP _______________________________________________
Date of Birth ________________________________________________
Relaonship to Designated Beneciary ___________________________
Tax ID (SSN/TIN) ____________________ Percent Designated ________
(The total percentage designated must equal 100%. If more than one
death beneciary is designated and no percentages are indicated, the
deathbeneciarieswillbedeemedtoownequalsharepercentagesinthe
CoverdellESA.)
CONTINGENT DEATH BENEFICIARY
Name ______________________________________________________
Address ____________________________________________________
City/State/ZIP _______________________________________________
Date of Birth ________________________________________________
Relaonship to Designated Beneciary ___________________________
Tax ID (SSN/TIN) ____________________ Percent Designated ________
(Thetotalpercentagedesignatedmustequal100%. If more than one death
beneciary is designated and no percentages are indicated, the death
beneciaries will be deemed to own equal share percentages in the
CoverdellESA.)
PART 7. INVESTMENT AND DEPOSIT INFORMATION
INVESTMENT INFORMATION (Completethisseconasapplicable.)
InvestmentDescripon QuantyorAmount InvestmentNumber TermorMaturityDate InterestRate
__________________________________________________ ________________________ ____________________ ____________________ ___________
__________________________________________________ ________________________ ____________________ ____________________ ___________
__________________________________________________ ________________________ ____________________ ____________________ ___________
DEPOSIT METHOD
Cash or Check (Ifthecontribuontypeistransfer,thecheckmustbefromanancialorganizaonmadepayabletothetrusteeforthisCoverdellESA.)
Internal Account
Account Number _____________________________________________ Type (e.g.,checking,savings,CoverdellESA) _________________________
External Account (e.g.,EFT,ACH,wire) (Addionaldocumentaonmayberequiredandfeesmayapply.)
Name of Organizaon Sending the Assets ____________________________________________ Roung Number (Oponal) ___________________
Account Number _____________________________________________ Type (e.g.,checking,savings,CoverdellESA) _________________________
Deposit Taken by ____________________________________
PART 9. SIGNATURES
Important: Pleasereadbeforesigning.
The grantor and responsible individual have received a copy of the Coverdell ESA Applicaon, the 5305-E Coverdell ESA Trust Account Agreement, and
the Disclosure Statement. The grantor and responsible individual understand that the terms and condions that apply to this Coverdell ESA are
contained in this Applicaon and the Coverdell ESA Trust Account Agreement, and agree to be bound by those terms and condions.
The grantor assumes responsibility for determining that he or she is eligible to make this contribuon and that the contribuon is within the limits set
forth by the tax laws.
The responsible individual assumes responsibility for
• ensuring that all future contribuons are within the limits set forth by the tax laws,
• cerfying that he or she is qualied to assume the responsibilies of the responsible individual as set forth in the Coverdell ESA Trust Account
Agreement, and
• managing and administering the Coverdell ESA and authorizing transacons involving contribuons (including rollover contribuons) and
distribuons.
X X ____________________________________________ _______________________ ____________________________________________ ____________________
Signature of Coverdell ESA Grantor Date (mm/dd/yyyy) Signature of Witness Date (mm/dd/yyyy)
X X ____________________________________________ _______________________ ____________________________________________ ____________________
Signature of Coverdell ESA Responsible Individual Date (mm/dd/yyyy) Signature of Trustee Date (mm/dd/yyyy)
Name of Coverdell ESA Designated Beneciary______________________________________________, Account Number ________________________
Page 3 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
The grantor whose name appears on the applicaon is establishing a
Coverdell Educaon Savings Account under secon 530 for the benet of
the designated beneciary whose name appears on the applicaon
exclusively to pay for the qualied elementary, secondary, and higher
educaon expenses, within the meaning of secon 530(b)(2), of such
designated beneciary.
The grantor has assigned the trust account the sum indicated on the
applicaon.
The grantor and the trustee make the following agreement:
ARTICLE I
The trustee may accept addional cash contribuons provided the
designated beneciary has not aained the age of 18 as of the date such
contribuons are made. Contribuons by an individual contributor may be
made for the tax year of the designated beneciary by the due date of the
beneciary’s tax return for that year (excluding extensions). Total
contribuons that are not rollover contribuons described in secon
530(d)(5) are limited to $2,000 for the tax year. In the case of an individual
contributor, the $2,000 limitaon for any year is phased out between
modied adjusted gross income (AGI) of $95,000 and $110,000. For
married individuals ling jointly, the phase-out occurs between modied
AGI of $190,000 and $220,000. Modied AGI is dened in secon 530(c)(2).
ARTICLE II
No part of the trust account funds may be invested in life insurance
contracts, nor may the assets of the trust account be commingled with
other property except in a common trust fund or a common investment
fund (within the meaning of secon 530(b)(1)(D)).
ARTICLE III
1. Any balance to the credit of the designated beneciary on the date on
which he or she aains age 30 shall be distributed to him or her within
30 days of such date.
2. Any balance to the credit of the designated beneciary shall be
distributed within 30 days of his or her death unless the designated
death beneciary is a family member of the designated beneciary and
is under the age of 30 on the date of death. In such case, that family
member shall become the designated beneciary as of the date of
death.
ARTICLE IV
The grantor shall have the power to direct the trustee regarding the
investment of the amount listed on the applicaon assigned to the trust
(including earnings thereon) in the investment choices oered by the
trustee. The responsible individual, however, shall have the power to
redirect the trustee regarding the investment of such amounts, as well as
the power to direct the trustee regarding the investment of all addional
contribuons (including earnings thereon) to the trust. In the event that
the responsible individual does not direct the trustee regarding the
investment of addional contribuons (including earnings thereon), the
inial investment direcon of the grantor also will govern all addional
contribuons made to the trust account unl such me as the responsible
individual otherwise directs the trustee. Unless otherwise provided in this
agreement, the responsible individual also shall have the power to direct
the trustee regarding the administraon, management, and distribuon
of the account.
ARTICLE V
The “responsible individual” named by the grantor shall be a parent or
guardian of the designated beneciary. The trust shall have only one
responsible individual at any me. If the responsible individual becomes
incapacitated or dies while the designated beneciary is a minor under
state law, the successor responsible individual shall be the person named
to succeed in that capacity by the preceding responsible individual in a
witnessed wring or, if no successor is so named, the successor responsible
individual shall be the designated beneciary’s other parent or successor
guardian. Unless otherwise directed by checking the opon on the
applicaon, at the me that the designated beneciary aains the age of
majority under state law, the designated beneciary becomes the
responsible individual. If a family member under the age of majority under
state law becomes the designated beneciary by reason of being a named
death beneciary, the responsible individual shall be such designated
beneciary’s parent or guardian.
ARTICLE VI
(Seetheapplicaonandsecon10.06ofthisagreementforinformaon
regarding the responsible individual’s ability to change the designated
beneciarynamedbythegrantor.)
ARTICLE VII
1. The grantor agrees to provide the trustee with all informaon
necessary to prepare any reports required by secon 530(h).
2. The trustee agrees to submit to the Internal Revenue Service (IRS) and
responsible individual the reports prescribed by the IRS.
ARTICLE VIII
Notwithstanding any other arcles which may be added or incorporated,
the provisions of Arcles I through III will be controlling. Any addional
arcles inconsistent with secon 530 and the related regulaons will be
invalid.
ARTICLE IX
This agreement will be amended as necessary to comply with the
provisions of the Code and the related regulaons. Other amendments
may be made with the consent of the grantor and trustee whose
signatures appear on the applicaon.
ARTICLE X
10.01 NocesandChangeofAddress– Any required noce regarding this
Coverdell ESA will be considered eecve when the trustee sends it
to the intended recipient at the last address that the trustee has in
its records. Any noce to be given to the trustee will be considered
eecve when the trustee actually receives it. The responsible
individual must nofy the trustee of any change of address.
10.02 Representaons and Responsibilies – The grantor and the
responsible individual represent and warrant to the trustee that
any informaon the grantor and responsible individual have given
or will give the trustee with respect to this agreement is complete
and accurate. Further, the grantor and the responsible individual
agree that any direcons they give the trustee, or acon they take
will be proper under this agreement, and that the trustee is entled
to rely upon any such informaon or direcons. If the trustee fails
to receive direcons regarding any transacon, receives ambiguous
direcons regarding any transacon, or if the trustee, in good faith,
believes that any transacon requested is in dispute, the trustee
reserves the right to take no acon unl further claricaon
COVERDELL ESA TRUST ACCOUNT AGREEMENT
Form 5305-E under secon 530 of the Internal Revenue Code. FORM (Rev. October 2010)
Page 4 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
acceptable to the trustee is received from the responsible individual
or the appropriate government or judicial authority. The trustee
will not be liable for acng upon any instrucons given by the
responsible individual named on the applicaon prior to the me
the trustee receives appropriate wrien noce that the designated
beneciary has met the requirements for assuming control of the
Coverdell ESA, or that a new responsible individual has been
appointed. The trustee will not be responsible for losses of any kind
that may result from the grantor’s and responsible individual’s
direcons to it or the grantor’s and responsible individual’s acons,
or failures to act. The grantor and responsible individual agree to
reimburse the trustee for any loss the trustee may incur as a result
of such direcons, acons or failures to act. The trustee will not be
responsible for any penales, taxes, judgments, or expenses
incurred in connecon with this Coverdell ESA. The trustee has no
duty to determine whether the contribuons or distribuons
comply with the Code, regulaons, rulings, or this agreement.
The responsible individual will have 60 days aer receiving any
documents, statements, or other informaon from the trustee to
nofy the trustee in wring of any errors or inaccuracies reected
in these documents, statements, or other informaon. If the
trustee is not noed within 60 days, the documents, statements,
or other informaon will be deemed correct and accurate, and the
trustee will have no further liability or obligaon for such documents,
statements, other informaon, or the transacons described
therein.
By performing services under this agreement the trustee is acng as
the responsible individual’s agent. Unless secon 10.05(b) of this
agreement applies, the grantor, responsible individual, and
designated beneciary acknowledge and agree that nothing in this
agreement will be construed as conferring duciary status upon the
trustee. The trustee will not be required to perform any addional
services unless specically agreed to under the terms and condions
of this agreement, or as required under the Code and the regulaons
promulgated thereunder with respect to Coverdell ESAs. The
designated beneciary, grantor, and responsible individual agree to
indemnify and hold the trustee harmless for any and all claims,
acons, proceedings, damages, judgments, liabilies, costs, and
expenses, including aorney’s fees arising from or in connecon
with this agreement.
Notwithstanding anything in this agreement to the contrary, the
trustee may establish a policy perming someone other than the
designated beneciary’s parent or legal guardian to serve as
responsible individual, provided the individual is not prohibited by
law from serving in that capacity and fullling his or her obligaons
under this agreement.
To the extent wrien instrucons or noces are required under this
agreement, the trustee may accept or provide such informaon in
any other form permied by the Code or applicable regulaons
including, but not limited to, electronic communicaon.
10.03 Disclosureof Account Informaon – The trustee may use agents
and/or subcontractors to assist in administering this Coverdell ESA.
The trustee may release nonpublic personal informaon regarding
this Coverdell ESA to such providers as necessary to provide the
products and services made available under this agreement, and to
evaluate its business operaons and analyze potenal product,
service, or process improvements.
10.04 ServiceFees– The trustee has the right to charge an annual service
fee or other designated fees (e.g., a transfer, rollover, or terminaon
fee) for maintaining this Coverdell ESA. In addion, the trustee has
the right to be reimbursed for all reasonable expenses, including
legal expenses, incurred in connecon with the administraon of
this Coverdell ESA. The trustee may charge the grantor or responsible
individual separately for any fees or expenses, or may deduct the
amount of the fees or expenses from the assets in this Coverdell ESA
at the trustee’s discreon. The trustee reserves the right to charge
any addional fee aer giving the responsible individual 30 days’
noce. Fees such as subtransfer agent fees or commissions may be
paid to the trustee by third pares for assistance in performing
certain transacons with respect to this Coverdell ESA.
Any brokerage commissions aributable to the assets in the
Coverdell ESA will be charged to the Coverdell ESA. The responsible
individual, grantor or designated beneciary cannot reimburse the
Coverdell ESA for those commissions.
10.05 InvestmentofAmountsintheCoverdellESA–
a. ResponsibleIndividualManagementofInvestment. Unless the
Coverdell ESA or a poron of the Coverdell ESA is a managed
Coverdell ESA, the responsible individual has exclusive
responsibility for and control over the investment of the assets
of this Coverdell ESA. All transacons will be subject to any and
all restricons or limitaons, direct or indirect, that are imposed
by the trustee’s charter, arcles of incorporaon, or bylaws; any
and all applicable federal and state laws and regulaons; the
rules, regulaons, customs, and usages of any exchange, market,
or clearinghouse where the transacon is executed; the trustee’s
policies and pracces; and this agreement. The trustee will have
no discreon to direct any investment in this Coverdell ESA. The
trustee assumes no responsibility for rendering investment
advice with respect to this Coverdell ESA, nor will the trustee
oer any opinion or judgment to the responsible individual or
grantor on maers concerning the value or suitability of any
investment or proposed investment for this Coverdell ESA. In
the absence of instrucons from the responsible individual or
grantor, or if the instrucons are not in a form acceptable to the
trustee, the trustee will have the right to hold any uninvested
amounts in cash, and the trustee will have no responsibility to
invest uninvested cash unless and unl directed by the
responsible individual. The trustee will not exercise the vong
rights and other shareholder rights with respect to investments
in this Coverdell ESA unless mely, wrien direcons are
provided and are acceptable to the trustee.
The responsible individual will select the investment for the
Coverdell ESA assets from those investments that the trustee is
authorized by its charter, arcles of incorporaon, or bylaws to
oer and does in fact oer for Coverdell ESAs (e.g., term share
accounts, passbook accounts, cercates of deposit, money
market accounts). The trustee may, in its sole discreon, make
available addional investment oerings, that will be limited to
publicly-traded securies, mutual funds, money market
instruments, and other investments that are obtainable by the
trustee and that the trustee is capable of holding in the ordinary
course of its business.
b. Trustee Management of Investment. If any poron of this
Coverdell ESA is a managed Coverdell ESA as indicated on the
applicaon or any other supporng documentaon, the trustee
will manage the investment of the applicable Coverdell ESA
assets. Accordingly, the trustee can manage, sell, contract to
sell, grant, or exercise opons to purchase, convey, exchange,
transfer, abandon, improve, repair, insure, lease for any term,
and otherwise deal with all property, real or personal, in this
Coverdell ESA in such manner, for such prices and on such terms
and condions as the trustee will decide.
Page 5 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
The trustee will have the power to do any of the following as it
deems necessary or advisable.
1. To invest the Coverdell ESA assets in a single trust fund, and
to collect the income without disncon between principal
and income
2. To invest the Coverdell ESA assets in a common trust fund or
common investment fund within the meaning of Internal
Revenue Code (IRC) Secon 530(b)(1)(D)
3. To invest the Coverdell ESA assets into savings instruments
that the trustee oers
4. To invest the Coverdell ESA assets in any other type of
investment permied by law, including, but not limited to,
common or preferred stock, open- or closed-end mutual
funds, bonds, notes, debentures, opons, U.S. Treasury bills,
commercial paper, or real estate
5. To hold any securies or other property under this
agreement in the trustee’s name, in the name of a nominee,
or in bearer form
6. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance (including documents
for the transfer and conveyance of real estate), and any and
all instruments that may be necessary or appropriate to
carry out the trustee’s powers
7. To employ suitable agents, aorneys, or other persons
8. To enter into lawsuits or sele any claims concerning the
assets in this Coverdell ESA, and to be reimbursed for any
expenses or damages from the grantor, responsible
individual, or the Coverdell ESA assets
9. To exercise the vong rights and other shareholder rights
with respect to securies in this Coverdell ESA, provided,
however, that the trustee reserves the right to enter into a
separate agreement with the responsible individual
governing the exercise of vong and other shareholder rights
10. To perform any and all acts that the trustee deems necessary
or appropriate for the proper administraon of this Coverdell
ESA.
All of the foregoing notwithstanding, the trustee’s powers will be
subject to any and all restricons or limitaons, direct or indirect,
that are imposed by its charter, arcles of incorporaon, or bylaws;
any and all applicable federal and state laws and regulaons; the
rules, regulaons, customs, and usages of any exchange, market, or
clearing house where the transacon is executed; its policies and
pracces; and this agreement.
10.06 Beneciaries– Unless indicated otherwise on the applicaon, the
responsible individual may not change the designated beneciary.
If the grantor has indicated on the applicaon that the responsible
individual may change the beneciary designated under this
agreement and the responsible individual chooses to do so, the
responsible individual must designate a member of the family (as
dened in IRC Secon 529(e)(2)) of the exisng designated
beneciary. This designaon can only be made on a form prescribed
by the trustee.
The grantor or responsible individual may designate one or more
persons or enes as death beneciaries of this Coverdell ESA. This
designaon can only be made on a form provided by or acceptable
to the trustee, and it will only be eecve when it is led with the
trustee during the lifeme of the designated beneciary. Each
beneciary designaon led with the trustee will cancel all previous
designaons. The consent of a death beneciary will not be
required in order to revoke a death beneciary designaon. If both
primary and conngent death beneciaries have been named, and
no primary death beneciary survives the designated beneciary,
the conngent death beneciaries will acquire the designated
share of this Coverdell ESA. If a death beneciary is not designated
with respect to this Coverdell ESA, or if all of the primary and
conngent death beneciaries predecease the designated
beneciary, the designated beneciary’s estate will be the death
beneciary.
If the designated beneciary dies before receiving all of the
amounts in this Coverdell ESA, the trustee will have no obligaon to
pay to the death beneciaries unl such me the trustee is noed
of the designated beneciary’s death by receiving a valid death
cercate. Any balance remaining in the Coverdell ESA upon the
death of the designated beneciary will be distributed within 30
days of the designated beneciary’s death, unless a qualied family
member under age 30 is named as a death beneciary. If the death
beneciary is a qualied family member under age 30, that
individual will become the designated beneciary as of the original
designated beneciary’s date of death. Qualied family members
are dened in IRC Secon 529(e)(2).
The trustee may, for any reason (e.g., due to limitaons of its
charter or bylaws), require a qualied family member who becomes
the designated beneciary to take a total distribuon of the
Coverdell ESA by December 31 of the year following the year of the
original designated beneciary’s death.
10.07 TerminaonofAgreement,Resignaon,orRemovalofTrustee–
Either the trustee or the responsible individual may terminate this
agreement at any me by giving wrien noce to the other. The
trustee can resign as trustee at any me eecve 30 days aer
sending wrien noce of its resignaon to the responsible
individual. Upon receipt of that noce, the responsible individual
must make arrangements to transfer the Coverdell ESA to another
nancial organizaon. If the responsible individual does not
complete a transfer of the Coverdell ESA within 30 days from the
date the trustee sends the noce to the responsible individual, the
trustee has the right to transfer the Coverdell ESA assets to a
successor Coverdell ESA trustee or custodian that the trustee
chooses in its sole discreon, or the trustee may pay the Coverdell
ESA balance to the designated beneciary in a single sum. The
trustee will not be liable for any acons or failures to act on the part
of any successor trustee or custodian, nor for any tax consequences
the designated beneciary may incur that result from the transfer
or distribuon of the Coverdell ESA assets pursuant to this secon.
If this agreement is terminated, the trustee may charge the
Coverdell ESA a reasonable amount of money that it believes is
necessary to cover any associated costs, including but not limited to
one or more of the following.
• Any fees, expenses, or taxes chargeable against the Coverdell
ESA
• Any penales or surrender charges associated with the early
withdrawal of any savings instrument or other investment in the
Coverdell ESA
If the trustee is a nonbank trustee required to comply with
Regulaons secon 1.408-2(e) and fails to do so or the trustee is
not keeping the records, making the returns or sending the
statements as are required by forms or regulaons, the IRS may
require the trustee to substute another trustee or custodian.
Page 6 of 9
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The trustee may establish a policy requiring distribuon of the
enre balance of this Coverdell ESA to the designated beneciary in
cash or property if the balance of this Coverdell ESA drops below
the minimum balance required under the applicable investment or
policy established.
10.08 SuccessorTrustee– If the trustee’s organizaon changes its name,
reorganizes, merges with another organizaon (or comes under the
control of any federal or state agency), or if the enre organizaon
(or any poron that includes this Coverdell ESA) is bought by
another organizaon, that organizaon (or agency) will
automacally become the trustee or custodian of this Coverdell
ESA, but only if it is the type of organizaon authorized to serve as
a Coverdell ESA trustee or custodian.
10.09 Amendments– The trustee has the right to amend this agreement
at any me. Any amendment the trustee makes to comply with the
Internal Revenue Code and related regulaons does not require the
consent of either the responsible individual or the grantor. The
responsible individual will be deemed to have consented to any
other amendment unless, within 30 days from the date the trustee
sends the amendment, the responsible individual noes the
trustee in wring that the responsible individual does not consent.
10.10 WithdrawalsorTransfers– All requests for withdrawal or transfer
will be in wring on a form provided by or acceptable to the
trustee. The method of distribuon must be specied in wring or
in any other method acceptable to the trustee. The tax idencaon
number of the designated beneciary or death beneciary must be
provided to the trustee before the trustee is obligated to make a
distribuon. Withdrawals will be subject to all applicable tax and
other laws and regulaons, including but not limited to possible
early distribuon penalty taxes, surrender charges, and withholding
requirements.
10.11 Transfers From Other Plans – The trustee can receive amounts
transferred to the Coverdell ESA from the trustee or custodian of
another Coverdell ESA.
10.12 LiquidaonofAssets– The trustee has the right to liquidate assets
in the Coverdell ESA if necessary to make distribuons or to pay
fees, expenses, taxes, penales, or surrender charges properly
chargeable against the Coverdell ESA. If the responsible individual
fails to direct the trustee as to which assets to liquidate, the trustee
will decide, in its complete and sole discreon, and the responsible
individual agrees not to hold the trustee liable for any adverse
consequences that result from the trustee’s decision.
10.13 RestriconsontheFund– Neither the responsible individual, the
designated beneciary (nor anyone acng on behalf of the
designated beneciary), the grantor nor any contributor may sell,
transfer or pledge any interest in the Coverdell ESA in any manner
whatsoever, except as provided by law or this agreement.
The assets in the Coverdell ESA will not be responsible for the
debts, contracts, or torts of the responsible individual, the
designated beneciary, the grantor, or any person entled to
distribuons under this agreement.
10.14 What Law Applies – This agreement is subject to all applicable
federal and state laws and regulaons. If it is necessary to apply any
state law to interpret and administer this agreement, the law of the
trustee’s domicile will govern.
If any part of this agreement is held to be illegal or invalid, the
remaining parts will not be aected. Neither the responsible
individual’s nor the trustee’s failure to enforce at any me or for
any period of me any of the provisions of this agreement will be
construed as a waiver of such provisions, or the pares’ right
thereaer to enforce each and every such provision.
GENERAL INSTRUCTIONS
SeconreferencesaretotheInternalRevenueCodeunlessotherwisenoted.
WHAT’S NEW
MilitaryDeathGratuity– Families of soldiers who receive military death
benets may contribute, subject to certain limitaons, up to 100 percent
of such benets into an educaonal savings account. Publicaon 970, Tax
Benets for Educaon, explains the rules for rolling over the military
death gratuity and lists eligible family members.
PURPOSE OF FORM
Form 5305-E is a model trust account agreement that meets the
requirements of secon 530(b)(1) and has been pre-approved by the IRS.
A Coverdell educaon savings account (ESA) is established aer the form
is fully executed by both the grantor and the trustee. This account must be
created in the United States for the exclusive purpose of paying the
qualied elementary, secondary, and higher educaon expenses of the
designated beneciary.
If the model account is a custodial account, see Form 5305-EA, Coverdell
Educaon Savings Custodial Account.
Do not le Form 5305-E with the IRS. Instead, the grantor must keep the
completed form in its records.
DEFINITIONS
Trustee– The trustee must be a bank or savings and loan associaon, as
dened in secon 408(n), or any person who has the approval of the IRS
to act as trustee. Any person who may serve as a trustee of a Tradional
IRA may serve as the trustee of a Coverdell ESA.
Grantor– The grantor is the person who establishes the trust account.
DesignatedBeneciary– The designated beneciary is the individual on
whose behalf the trust account has been established.
FamilyMember– Family members of the designated beneciary include
his or her spouse, child, grandchild, sibling, parent, niece or nephew, son-
in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or
sister-in-law, and the spouse of any such individual. A rst cousin, but not
his or her spouse, is also a “family member.”
ResponsibleIndividual– The responsible individual, generally, is a parent
or guardian of the designated beneciary. However, under certain
circumstances, the responsible individual may be the designated
beneciary.
IDENTIFICATION NUMBERS
The grantor and designated beneciary’s social security numbers will
serve as their idencaon numbers. If the grantor is a nonresident alien
and does not have an idencaon number, write “Foreign” in the block
where the number is requested. The designated beneciary’s social
security number is the idencaon number of his or her Coverdell ESA. If
the designated beneciary is a nonresident alien, the designated
beneciary’s individual taxpayer idencaon number is the idencaon
number of his or her Coverdell ESA. An employer idencaon number
(EIN) is required only for a Coverdell ESA for which a return is led to
report unrelated business income. An EIN is required for a common fund
created for Coverdell ESAs.
Page 7 of 9
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REQUIREMENTSOFACOVERDELLESA
A. CashContribuons– A Coverdell ESA contribuon must be in cash.
B. MaximumContribuon– The total amount that may be contributed
to any and all Coverdell ESAs on behalf of a designated beneciary is
$2,000 per year, excluding rollover and transfer contribuons.
Contribuons may not be made to a Coverdell ESA aer the designated
beneciary’s 18th birthday, except in the case of a special needs
beneciary.
The Coverdell ESA contribuon that may be made by a grantor is
further limited if the grantor’s modied adjusted gross income (MAGI)
exceeds $190,000 and he or she is a married individual ling jointly
($95,000 for single taxpayers). Married individuals ling jointly with
MAGI exceeding $220,000 may not fund a Coverdell ESA. Single
individuals with MAGI exceeding $110,000 may not fund a Coverdell
ESA. The MAGI limits apply only to grantors that are individuals.
If the grantor is married ling jointly with MAGI between $190,000 and
$220,000, the maximum Coverdell ESA contribuon is determined as
follows: (1) subtract the grantor’s MAGI from $220,000, (2) divide the
dierence by $30,000, and (3) mulply the result in step (2) by $2,000.
For example, if the grantor’s MAGI is $205,000, the maximum
Coverdell ESA contribuon that may be made by such grantor is
$1,000. This amount is determined as follows: [($220,000 minus
$205,000) divided by $30,000] mulplied by $2,000.
If the grantor is a single tax ler with MAGI between $95,000 and
$110,000, the maximum Coverdell ESA contribuon is determined as
follows: (1) subtract the grantor’s MAGI from $110,000, (2) divide the
dierence by $15,000, and (3) mulply the result in step (2) by $2,000.
For example, if the grantor’s MAGI is $98,000, the maximum Coverdell
ESA contribuon that may be made by such grantor is $1,600. This
amount is determined as follows: [($110,000 minus $98,000) divided
by $15,000] mulplied by $2,000.
The Coverdell ESA contribuon that may be made by a grantor is not
limited by contribuons made by the grantor to Tradional or Roth
IRAs. In addion, there is no earned income requirement to be eligible
to contribute to a Coverdell ESA. There is no requirement that the
grantor be related to the designated beneciary in order to make
contribuons. In addion, the designated beneciary may contribute
to his or her own Coverdell ESA.
C. EligibleTrustees– The trustee of the Coverdell ESA must be a bank,
savings and loan associaon, credit union, or person or enty approved
by the Secretary of the Treasury.
D. Commingling Assets – The assets of the Coverdell ESA cannot be
commingled with other property except in a common trust fund or
common investment fund.
E. LifeInsurance– No poron of the Coverdell ESA may be invested in life
insurance contracts.
F. Collecbles– The assets of the Coverdell ESA may not be invested in
collecbles (within the meaning of Internal Revenue Code (IRC) Sec.
408(m)). A collecble is dened as any work of art, rug or anque,
metal or gem, stamp or coin, alcoholic beverage, or other tangible
personal property specied by the Internal Revenue Service (IRS).
However, specially minted United States gold and silver coins, and
certain state-issued coins are permissible investments. Planum coins
and certain gold, silver, planum or palladium bullion (as described in
IRC Sec. 408(m)(3)) are also permied as Coverdell ESA investments.
G. Required Distribuons– Except in the case of a special needs
beneciary, the assets of the Coverdell ESA are required to be
distributed to the designated beneciary within 30 days of the
designated beneciary’s aainment of age 30. The designated
beneciary will be subject to both income tax and an addional 10
percent penalty tax on the poron of the distribuon that represents
earnings, if the designated beneciary does not have any qualied
educaon expenses in that year.
Any balance remaining in the Coverdell ESA upon the death of the
designated beneciary will be distributed within 30 days of the
designated beneciary’s death, unless a death beneciary is named
and the death beneciary is a qualied family member under age 30. If
the death beneciary is a qualied family member under age 30, that
individual will become the designated beneciary as of the date of
death. Qualied family members include the designated beneciary’s
child, grandchild, or stepchild, brother, sister, stepbrother, or stepsister,
nephew or niece, parents, stepparents, or grandparents, uncle or aunt,
spouses of all the family members listed above, cousin, and the
designated beneciary’s spouse.
If a qualied family member becomes the designated beneciary, the
trustee, if it so chooses for any reason (e.g., due to limitaons of its
charter or bylaws), may require a total distribuon of the Coverdell ESA
by December 31 of the year following the year of the original
designated beneciary’s death.
H. Responsible Individual– The responsible individual is generally the
parent or guardian of the designated beneciary. However, the
nancial organizaon may establish a policy that permits someone
other than the designated beneciary’s parent or legal guardian to
DISCLOSURE STATEMENT
SPECIFIC INSTRUCTIONS
Note: The age limitaon restricng contribuons, distribuons, rollover
contribuons, and change of beneciary are waived for a designated
beneciarywithspecialneeds.
Arcle X – Arcle X and any that follow may incorporate addional
provisions that are agreed to by the grantor and trustee to complete the
agreement. They may include, for example, provisions relang to:
denions, investment powers, vong rights, exculpatory provisions,
amendment and terminaon, removal of the trustee, trustee’s fees, state
law requirements, treatment of excess contribuons, and prohibited
transacons with the grantor, designated beneciary, or responsible
individual, etc. Aach addional pages as necessary.
Oponal Provisions in Arcle V and Arcle VI – Form 5305-E may be
reproduced in a manner that provides only those oponal provisions
oered by the trustee.
Page 8 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
serve as the responsible individual. Unless otherwise indicated on the
applicaon, the responsible individual may not change the designated
beneciary. If the grantor has indicated on the applicaon that the
responsible individual may change the designated beneciary, the
responsible individual may change the designated beneciary to
another member of the designated beneciary’s family. The responsible
individual will perform the following dues.
1. Receive a copy of the plan agreement and disclosure statement,
2. Direct the trustee regarding the investment of contribuons,
including the ability to redirect the investment of the inial
contribuon,
3. Direct the trustee regarding the administraon, management and
distribuon of the account, unless the plan agreement indicates
otherwise,
4. Name a successor responsible individual if the need arises,
5. Nofy the trustee of any address change for the individuals
idened on the plan agreement,
6. Remove excess contribuons made to the Coverdell ESA.
INCOME TAX CONSEQUENCES OF ESTABLISHING A
COVERDELL ESA
A. ContribuonsNotDeducted– No deducon is allowed for Coverdell
ESA contribuons, including transfer and rollover contribuons.
B. Contribuon Deadline – The deadline for making a Coverdell ESA
contribuon is the grantor’s tax return due date (not including
extensions).The grantor may designate a contribuon as a contribuon
for the preceding taxable year in a manner acceptable to the trustee.
For example, if the grantor is a calendar-year ler and makes a
Coverdell ESA contribuon on or before the tax ling deadline, the
contribuon is considered to have been made for the previous tax year
if the grantor designates it as such.
C. Excess Contribuons – An excess contribuon is any amount that is
contributed to the Coverdell ESA that exceeds the eligible contribuon
limit. If the excess is not corrected mely, an addional penalty tax of
six percent will be imposed on the excess amount. The procedure for
correcng the excess is determined by the meliness of the correcon
as idened below.
1. Removal Before the Deadline. The responsible individual should
remove the excess contribuon along with the earnings aributable
to the excess, before June 1 of the year following the year for which
the excess was made. An excess withdrawn by this deadline is not
taxable upon distribuon, but the designated beneciary must
include the earnings aributable to the excess in his or her taxable
income for the year in which the excess contribuon was made. The
six percent excess contribuon penalty tax will be avoided.
2. Failure to Remove Before the Deadline. Excess Coverdell ESA
contribuons that are not removed before June 1 of the year
following the year for which the excess was made, are treated as
contribuons for the next calendar year. If, however, addional
contribuons are made for that year and the total amount results
in an excess, the excess amount will be subject to a six percent
penalty tax if not removed mely.
If addional contribuons have been made for the next year, the
amount of the excess equals the excess contribuon for the current
year, plus the excess contribuons remaining from the preceding
year, reduced by any distribuons made during the current year.
The designated beneciary must le IRS form 5329 to report and remit
any addional penalty taxes to the IRS.
D. Tax-DeferredEarnings– The investment earnings of the Coverdell ESA
are not subject to federal income tax as they accumulate in the
Coverdell ESA. In addion, distribuons of the Coverdell ESA earnings
will be free from federal income tax if the distribuons are taken to pay
for qualied educaon expenses, as discussed below.
E. Taxaon of Distribuons – The taxaon of distribuons from the
Coverdell ESA depends on whether or not the distribuons are used for
qualied educaon expenses.
1. Qualied Educaon Expenses. The designated beneciary may
take tax-free distribuons from a Coverdell ESA to pay for
elementary, secondary or post-secondary educaon expenses at an
eligible educaonal instuon. Such expenses include tuion, fees,
books, supplies, special needs services, room and board, uniforms,
transportaon, academic tutoring and supplementary items or
services (including extended day programs). Also qualifying are
expenses for the purchase of computer technology or equipment,
Internet access and related services, if such technology, equipment
or services are to be used by the designated beneciary or
designated beneciary’s family during any of the years the
designated beneciary is in school. Qualied expenses may also
include amounts contributed to a qualied tuion program.
2. NonqualifyingDistribuons. If a designated beneciary withdraws
amounts from a Coverdell ESA that exceed the qualied educaon
expenses for the same year, or the distribuons are not used for
qualied educaon expenses, a poron of the distribuons will be
taxable. The amount in excess of the qualied educaon expenses
is taxable pro rata, based on the earnings and the basis in the
account.
In most cases of a nonqualied distribuon, the taxable poron of
a Coverdell ESA distribuon is also subject to an addional 10
percent penalty tax. There are several excepons to the 10 percent
penalty tax including distribuons made payable
a. to a designated death beneciary of the Coverdell ESA or to the
estate of the designated beneciary following the death of the
designated beneciary;
b. to the designated beneciary if the designated beneciary is
disabled;
c. to the designated beneciary if the designated beneciary
received a qualied scholarship, an educaonal assistance
allowance or an excludable payment excepon, but only to the
extent the distribuon is not more than the amount of the
scholarship, allowance or excludable payment, and
d. to the designated beneciary as a removal of excess along with
the net income aributable.
3. AmericanOpportunityorLifemeLearningCredits. A designated
beneciary may claim the American Opportunity Credit (formerly
the Hope Credit) or Lifeme Learning Credit on his or her federal
income tax return in the same taxable year that a tax-free
distribuon from a Coverdell ESA is claimed, as long as the
distribuon(s) does not cover the same expenses claimed for the
American Opportunity or Lifeme Learning Credit.
F. IncomeTaxWithholding– Any withdrawal from the Coverdell ESA is
not subject to federal income tax withholding.
G. Rollovers – Coverdell ESA amounts may be rolled over to another
Coverdell ESA of the same designated beneciary or that of a qualied
family member, provided that all of the applicable rollover rules are
followed. Rollover is a term used to describe a tax-free movement of
cash to a Coverdell ESA from another Coverdell ESA. The rollover rules
are generally summarized below. These transacons are oen complex.
For quesons regarding a rollover, please see a competent tax advisor.
Page 9 of 9
5097 / 2500E-T (Rev. 10/2015) ©2015 Ascensus, Inc.
1. CoverdellESA-to-CoverdellESARollovers. Assets distributed from
a Coverdell ESA may be rolled over to another Coverdell ESA of the
same designated beneciary or that of a qualifying family member
if the requirements of IRC Sec. 530(d)(5) are met. A proper
Coverdell ESA-to-Coverdell ESA rollover is completed if all or part of
the distribuon is rolled over not later than 60 days aer the
distribuon is received.
EecvefordistribuonsoccurringonoraerJanuary1,2015, the
responsible individual is permied to roll over only one distribuon
from a Coverdell ESA in a 12-month period, regardless of the
number of Coverdell ESAs owned by the designated beneciary. A
distribuon may be rolled over to the same Coverdell ESA or to
another Coverdell ESA that is eligible to receive the rollover. For
more informaon on rollover limitaons, you may wish to obtain
IRS Publicaon 970, TaxBenetsforHigherEducaon, from the IRS
or refer to the IRS website at www.irs.gov.
2. Qualied Family Member. A Coverdell ESA may be rolled to
another Coverdell ESA of the same designated beneciary or to a
Coverdell ESA maintained for the benet of a qualied family
member of the designated beneciary, who is under the age of 30.
The age 30 limitaon does not apply to qualied family members
who are special needs beneciaries. Qualied family members of
the designated beneciary include the designated beneciary’s
child, grandchild, or stepchild, brother, sister, stepbrother, or
stepsister, nephew or niece, parents, stepparents, or grandparents,
uncle or aunt, spouses of all the family members listed above,
cousin, and designated beneciary’s spouse.
3. Rollover of Military Death Benets. If a designated beneciary
receives or has received a military death gratuity or a payment from
the Servicemembers’ Group Life Insurance (SGLI) program, the
designated beneciary may be able to roll over the proceeds to the
Coverdell ESA. The rollover contribuon amount is limited to the
sum of the death benets or SGLI payment received, less any such
amount that was rolled over to a Roth IRA. Proceeds must be rolled
over within one year of receipt of the gratuity or SGLI payment for
deaths occurring on or aer June 17, 2008. Any amount that is
rolled over under this provision is considered nontaxable basis in
the Coverdell ESA.
LIMITATIONS AND RESTRICTIONS
A. Gi Tax – Transfers of Coverdell ESA assets to a death designated
beneciary made during the designated beneciary’s life and at his or
her request or because of the designated beneciary’s failure to instruct
otherwise, may be subject to federal gi tax under IRC Sec. 2501.
B. Prohibited Transacons – If the responsible individual engages in a
prohibited transacon with the Coverdell ESA as described in IRC Sec.
4975, the Coverdell ESA will lose its tax-deferred status and the
designated beneciary must include the value of the earnings in his or
her account in his or her gross income for the year.
C. Pledging – If the responsible individual pledges any poron of the
Coverdell ESA as collateral for a loan, the amount so pledged will be
treated as a distribuon and may be included in the designated
beneciary’s gross income for that year to the extent that it represents
earnings.
OTHER
A. IRS Plan Approval – The agreement used to establish this Coverdell
ESA has been approved by the IRS. The IRS approval is a determinaon
only as to form. It is not an endorsement of the plan in operaon or of
the investments oered.
B.
AddionalInformaon–
Addional informaon on Coverdell ESAs may
be obtained from the District Oce of the IRS. In parcular IRS
Publicaon 970, TaxBenetsFor Higher Educaon, may be obtained
by calling 1-800-TAX-FORM, or by vising www.irs.gov on the Internet.
C.
ImportantInformaonAboutProceduresforOpeningaNewAccount
–
To help the government ght the funding of terrorism and money
laundering acvies, federal law requires all nancial organizaons to
obtain, verify, and record informaon that idenes each person who
opens an account. Therefore, when the grantor opens an account, he
or she is required to provide his or her name, residenal address, date
of birth, and idencaon number. The trustee may require other
informaon that will allow them to idenfy the grantor.
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ESA Simplifier COVERDELL EDUCATION SAVINGS ACCOUNT APPLICATION (Georgia's Own Credit Union)

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Completed 23 December 2020

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