529 College Savings Account to a Roth IRA in 2024!

🗣️Did you hear the news?!

As a part of the Secure Act 2.0, there will be a new way to do a tax-free, penalty-free rollover from a 529 college savings account to a Roth IRA starting in 2024.

From Forbes: “Currently, money in a 529 that’s distributed for non-education expenses can be subject to penalties and taxes. But under the new provision, beneficiaries would be able to do a rollover of up to $35,000 aggregate in life from a 529 to a Roth IRA in their name. The rollovers would be subject to the Roth IRA annual contribution limits and the 529 would need to have been open for at least 15 years. Earnings and contributions would be treated like any other Roth account or rollover. However, the income limitation to be able to contribute to a Roth IRA is removed for the 529 to Roth IRA rollover, but the annual contribution limit remains.”

This change is awesome because a transfer would avoid income tax and penalties that occur with withdrawing 529 earnings for non-education purposes. Investments would keep growing tax-free in a Roth account, and future retirement withdrawals would also be tax-free.

Hoping we will have some leftover money in my son’s account after he graduates and we can put it into a Roth IRA for him!