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age 30. This age limitation doesn't apply if the new benefi- ciary is a special needs beneficiary. An amount is rolled over if it is paid to another Cover- dell ESA within 60 days after the date of the distribution. Don't report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040, 1040-SR, or 1040-NR. These aren't taxable distributions. Members of the beneficiary's family. For these purpo- ses, the beneficiary's family includes the beneficiary's spouse and the following other relatives of the beneficiary. 1. Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them. 2. Brother, sister, stepbrother, or stepsister. 3. Father or mother or ancestor of either. 4. Stepfather or stepmother. 5. Son or daughter of a brother or sister. 6. Brother or sister of father or mother. 7. Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 8. The spouse of any individual listed above. 9. First cousin. Example. When Aaron graduated from college in Jan- uary last year, he had $5,000 left in his Coverdell ESA. He wanted to give this money to his younger sister, who was still in high school. In order to avoid paying tax on the dis- tribution of the amount remaining in his account, Aaron contributed the same amount to his sister's Coverdell ESA within 60 days of the distribution. You can make only one rollover from a Coverdell ESA to another Coverdell ESA in any 12-month period regardless of the number of Coverdell ESAs you own. However, you can make unlimited trans- fers from one Coverdell ESA trustee directly to another Coverdell ESA trustee because such transfers aren't con- sidered to be distributions or rollovers. The limit of one rollover during any 12-month period doesn't apply to the rollover of a military death gratuity or Servicemembers' Group Life Insurance (SGLI) payment. Military death gratuity. If you received a military death gratuity or a payment from Servicemembers' Group Life Insurance (SGLI), you may roll over all or part of the amount received to one or more Coverdell ESAs for the benefit of members of the beneficiary's family (see Mem- bers of the beneficiary's family, earlier). Such payments are made to an eligible survivor upon the death of a mem- ber of the U.S. Armed Forces. The contribution to a Cov- erdell ESA from survivor benefits received can't be made later than 1 year after the date on which you receive the gratuity or SGLI payment. This rollover contribution isn't subject to (but is in addi- tion to) the contribution limits discussed earlier under Con- tribution Limits. The amount you roll over can't exceed the CAUTION ! total survivor benefits you received, reduced by contribu- tions from these benefits to a Roth IRA or other Coverdell ESAs. The amount contributed from the survivor benefits is treated as part of your basis (cost) in the Coverdell ESA, and won't be taxed when distributed. See Distributions, later. The limit of one rollover during any 12-month pe- riod doesn't apply to the rollover of a military death gratuity or SGLI payment. Changing the Designated Beneficiary The designated beneficiary can be changed. See Mem- bers of the beneficiary's family, earlier. There aren't any tax consequences if, at the time of the change, the new beneficiary is under age 30 or is a special needs benefi- ciary. Example. Assume the same situation for Aaron as in the last example (see Rollovers, earlier). Instead of clos- ing his Coverdell ESA and paying the distribution into his sister's Coverdell ESA, Aaron could have instructed the trustee of his account to simply change the name of the beneficiary on his account to that of his sister. Transfer Because of Divorce If a spouse or former spouse receives a Coverdell ESA under a divorce or separation instrument, it isn't a taxable transfer. After the transfer, the spouse or former spouse treats the Coverdell ESA as his or her own. Example. In their divorce settlement, Peg received her ex-husband's Coverdell ESA. In this process, the account was transferred into her name. Peg now treats the funds in this Coverdell ESA as if she were the original owner. Distributions The designated beneficiary of a Coverdell ESA can take a distribution at any time. Whether the distributions are tax free depends, in part, on whether the distributions are equal to or less than the amount of Adjusted qualified edu- cation expenses (AQEE) (defined later) the beneficiary has in the same tax year. See Table 6-3 for highlights. CAUTION ! Chapter 6 Coverdell Education Savings Account (ESA) Page 45