Ezel / IRS Rulings / 201017044

CCA 201017044: Coverdell ESAs and 529 accounts are not levy-exempt

Number
201017044
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Administrative Policy; Property Exempt From Levy
Topics
Procedure, penalties, and administration
Code sections
§ 6331, § 6334
Ruling dated
February 24, 2010
Publicly released
April 30, 2010
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that Coverdell education savings accounts and section 529 accounts are not exempt from levy as a legal matter. The message cautioned that the taxpayer’s identity and property rights may differ between the two account types. It recommended reviewing the governing plan or account agreement and stated that no administrative policy on levying these accounts had been found.

Ruling snapshot

  • Question: Are Coverdell ESAs and 529 accounts exempt from levy?
  • Outcome: advice given
  • Key authorities: IRC §§ 6331 and 6334

Full text (IRS public release)

ID: CCA_2010022411594520 Number: 201017044
Release Date: 4/30/2010
Office: --------------
UILC: 6331.03-00, 6334.00-00

From: --------------------
Sent: Wednesday, February 24, 2010 12:00:32 PM
To: ---------------------
Cc:
Subject: RE: Levy question

Hi-----------

As you noted, as a legal matter, Coverdell ESAs and 529s are not exempt from levy. But note: There are differences between the two types of accounts, so the RO needs to be mindful of who the taxpayer is and what property rights, if any, he has. For example, the person setting up a Coverdell ESA does not has the right the withdraw the funds (which are held for the benefit of the beneficiary), while the person setting up a 529 can withdraw the funds (with tax consequences.) There are some general rules, but the RO should also try to obtain the agreement governing the plan/account.

I've found no administrative policy on levying on these types of accounts (and double- checked with the NO levy analyst). ---------------------------------------------------------------------
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