New 529 Rollovers to Roth IRAs

New 529 Rollovers to Roth IRAs as part of Congress’s $1.7 trillion federal spending package. 529 plan beneficiaries will now be able to roll over a portion of plan assets both tax-free and penalty-free to their Roth IRAs.

Conditions that Must be Met:

1. This applies to rollovers taking place after December 31, 2023.
2. Cumulatively, a beneficiary may roll over up to $35,000 over his/her lifetime.
3. Any amount rolled over is subject to the annual Roth IRA contribution limits. For 2024, the limit is scheduled to be $6,500 plus a $1,000 catch-up for individuals aged 50+.
4. Assets can’t be rolled over unless the 529 plan has existed for 15 years.
5. Changing beneficiaries will restart the 15-year time period.
6. Contributions or earnings on contributions made in the last 5 years are not eligible to be rolled over.

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Missie Beach, CFP®, CDFA®
Senior Financial Advisor