! ESA to another Coverdell ESA in any 12-month

CAUTION 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 roll- over during any 12-month period doesn't apply to the roll- over 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 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 Members of the beneficiary’s family , earlier). Such payments are made to an eligible survivor upon the death of a member of the U.S. Armed Forces. The contribution to a Coverdell 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 addition to) the contribution limits discussed earlier under Con- tribution Limits . The amount you roll over can’t exceed the

total survivor benefits you received, reduced by contributions 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.