What if a Prohibited Transaction Occurs If a “prohibited transaction”, as defined in Section 4975 of the Internal Revenue Code, occurs, the ▇▇▇▇▇▇▇▇▇ Education Savings Account could be disqualified. Rules similar to those that apply to Traditional IRAs will apply.
What if I Make a Contribution for Which I Am Ineligible or Change My Mind About the Type of IRA to Which I Wish to Contribute?
Are There Distribution Rules That Apply After Death Special rules apply in the case of the divorce or death of a beneficiary of a ▇▇▇▇▇▇▇▇▇ Education Savings Account. In particular, any balances to the credit of a beneficiary must, within 30 days of death, be either: (i) rolled over to another beneficiary’s ▇▇▇▇▇▇▇▇▇ Education Savings Account according to the requirements of Section (4) (in which case the distribution will not be subject to tax) or (ii) distributed to a death beneficiary or the beneficiary’s estate (in which case the distribution will be subject to tax).
What If I Engage in a Prohibited Transaction If you engage in a “prohibited transaction,” as defined in Section 4975 of the Internal Revenue Code, your account will be disqualified, and the entire balance in your account will be treated as if distributed to you and will be taxable to you as ordinary income. Examples of prohibited transactions are: a. the sale, exchange, or leasing of any property between you and your account; b. the lending of money or other extensions of credit between you and your account; or c. the furnishing of goods, services, or facilities between you and your account. If you are under age 59½, you may also be subject to the 10% penalty tax on early distributions in addition to ordinary income taxes.
YOUR BILLING RIGHTS - KEEP THIS NOTICE FOR FUTURE USE This notice tells you about your rights and our responsibilities under the Fair Credit Billing Act.