Coverdale Transfer to Grandchild?

[FlyFisher99]

My youngest child, FBO on a 25+ year old E-IRA/Coverdale IRA, will turn 30 soon and will not have any education expenses.  The only under-30 family member is a grandchild, niece to the FBO child. Is there a way to transfer those funds to that grandchild without the 10% penalty and ordinary income tax hit?

Is there anyway whatsoever to avoid the penalty and tax?

If not, is there a way to make the tax hit payable on my son’s tax bill (lower tax bracket)?

[Critter-3]

https://budgeting.thenest.com/can-education-ira-transfer-another-child-29703.html

[FlyFisher99]

I read that before posting my question.  Transferring to a child, niece, nephew, etc. is clearly ok.  Don't see grandchild mentioned. Doubt it's ok, but posted question hoping someone will have a bright idea.

[Hal_Al · Accepted solution]

Your grandchild is the beneficiary's niece and that is mentioned at https://fairmark.com/kids-and-college/coverdell-accounts/changing-beneficiary/

"For this purpose, the beneficiary’s family is broadly defined. All of the following are included:

• The beneficiary’s child, grandchild or stepchild.
• A brother, sister, stepbrother or stepsister of the beneficiary.
• A son or daughter of the beneficiary’s brother or sister (in other words, a niece or nephew of the beneficiary).
• The father, mother, grandfather, grandmother, stepfather or stepmother of the beneficiary. (Remember, though, the new beneficiary generally has to be under 30 years of age — a very young grandparent!)
• A brother or sister of the beneficiary’s father or mother (in other words, an aunt or uncle of the beneficiary).
• The beneficiary’s spouse, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
• The beneficiary’s first cousin."

[FlyFisher99]

Hal_Al - just what I was looking for, thank you.  

For anyone else researching Coverdale transfers, the IRS instructions for form "5498 - Coverdell ESA Contribution Information" are clear.  Look at paragraphs "Rollovers and Transfers" and "Family Members":

https://www.irs.gov/pub/irs-pdf/i5498e.pdf