Finra Exam SIE Topic 4 Question 4 Discussion

Actual exam question for Finra's SIE exam

Question #: 4
Topic #: 4

[All SIE Questions]

How long are unused funds permitted to remain in a Coverdell education savings account?

AAll funds must be distributed when the beneficiary's age reaches 21 years old.

BAll funds must be distributed when the beneficiary's age reaches 30 years old.

CAll funds must be distributed when the beneficiary's age reaches 59 years old.

DThere is no age limit preventing funds from remaining in a beneficiary's account.

Show Suggested Answer

Suggested Answer: B

Coverdell Education Savings Accounts (ESAs) require that all funds be distributed by the time the beneficiary reaches 30 years old. If the funds are not used for qualified educational expenses, they may be subject to taxes and penalties.

B is correct because funds must be distributed by age 30 unless transferred to another eligible family member.

A is incorrect as age 21 is not relevant for Coverdell ESAs.

C is incorrect because age 59 applies to retirement accounts like IRAs.

D is incorrect because there is a distribution deadline for Coverdell accounts.

by Brynn at Feb 11, 2025, 08:30 AM

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14 days ago

I think the answer is B. The beneficiary has until 30 years old to use the funds, right?

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Jame

7 days ago

A) All funds must be distributed when the beneficiary's age reaches 21 years old.

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