Common use of Excess Contributions Clause in Contracts

Excess Contributions. Aggregate contributions for the benefit of any one Designated Beneficiary in excess of the annual limit for a calendar year are treated as excess contributions. • If the excess contributions (and any earnings attributable to them) are not withdrawn from the Xxxxxxxxx ESA by May 31st of the following calendar year, the excess contribution is subject to a 6% excess tax for each year that the excess contribution remains in the Xxxxxxxxx ESA. • If the excess contributions (and any earnings) are timely withdrawn, no 6% excess tax applies. However, any earnings distributed in such a corrective distribution are taxable to the Designated Beneficiary, but no 10% additional tax applies to the earnings.

Appears in 17 contracts

Samples: Coverdell Education Savings Account Custodial Agreement, Coverdell Education Savings Account Custodial Agreement, Coverdell Education Savings Account Custodial Agreement

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