Convert ESA account to a Brokerage

System
System Member ✭✭✭✭
This discussion was created from comments split from: Buying & Selling Funds in a 529 Plan.

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  • PCNY
    PCNY Member ✭✭
    New to the community, so not sure where to ask...but this seems like a good place. I have 2 kids, and they each have two 529 plans (we moved states). The older one I evidently entered as a Coverdell ESA. Well, college is now upon us, so I am using that account first.

    There appears to be no way on the Windows subscription version to change that account from Coverdell ESA to brokerage (which is how the other 529 is set up). So now that I am taking a qualified distribution from the older account, there is no field to send the check to the college...I must Withdraw and Transfer.

    Which means I now need to set up a new account for the college?

    Or, I guess I could transfer to my existing checking account and then EFT it to the college, even though the 529 is sending a check directly.

    Any thoughts on either switching the account type (without losing 18.5 years of data) or on how to handle the distribution?

    Thanks!
  • Jim_Harman
    Jim_Harman SuperUser ✭✭✭✭✭
    edited July 2019
    [Edited] When you go to Account details, what type of account is shown for the one you want to change?

    In Quicken a Coverdell account is a special type of IRA. When I set one up in a QWin 2019 test file just now, it does have a Withdraw action if you click on Enter Transactions. I don't think there is any way to change the account type if it is currently something different. 

    As you say you can enter the payment to the college as a transfer to another account then a transfer to the college. If you use this approach, make sure the Tax schedule for transfers out of the account is blank, so Quicken will not think you have taken a taxable distribution from the account.

    Or you can set up a new 529 account in Quicken and use the Shares Transferred Between Accounts macro-transaction to move your current holdings into the new account. This will generate one Removed transaction for each of your current holdings and an Added transaction in the new account for each tax lot. If you have a lot of transactions, this will take some time, be patient! If there is cash in the old account, you should transfer it separately to the new one.

    The investing history will still be in the old account so you can review it. If you want to look at performance over a period that includes the transfer date, be sure to include both the old and new accounts in your analysis.

    Back up your data file first in case the result is not what you expected.
    QWin Premier subscription
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