Are You Missing Out on the New 529 to Roth IRA Transfer? Discover the Details
- Account Beneficiaries only. A rollover can only be made to the Roth IRA beneficiary – not the owner of the 529 account (if different).
- Holding period. The 529 account must have been in existence for a minimum of 15 years before rolling funds to a Roth IRA. Contributions made to the 529 plan in the last five years before distributions start – including the associated earning – are ineligible for a tax-free rollover.
- Lifetime limits apply. There is a lifetime limit of $35,000 which can be rolled over per beneficiary.
- Annual IRA contribution limits apply. For example, the 2024 contribution limit is $7,000 ($8,000 if the beneficiary is age 50-plus). If you wanted to roll over the entire $35,000 lifetime limit amount, you would have to do it over five years under current contribution limits. Also, keep in mind the annual amount eligible for rollover is reduced by any actual traditional or Roth IRA contributions made for that year. The beneficiary must also have earned income at least equal to the amount of the rollover. Conversely, regular Roth IRA contributions cannot be made if modified Adjusted Gross Income (MAGI) exceeds an applicable threshold, however, this limitation does not apply to 529-Roth IRA rollovers.
- To convert funds from a 529 plan to a Roth IRA, the 529 plan must be owned by the beneficiary for at least 15 years prior to the conversion, and the name on the 529 must be the same as the Roth IRA owner. The conversion is limited to the annual Roth IRA contribution limits, making this a multiyear strategy of conversion. The amount of funds converted also may not exceed the aggregate amount contributed to the 529 in the five years prior to the Roth IRA beginning conversion date.
Let's Team Up
Track how many perfect NCAA brackets are left in 2024: The final perfect men's bracket has fallen. No. 8 Utah State defeated No. 9 TCU 88-72 to eliminate the last perfect bracket among major online games: Men's Bracket Challenge Game, ESPN, CBS, and Yahoo. The men's tournament started with more than 31 million entries. Going into Friday, we were left with more than 2,100 perfect brackets. But on game No. 31 of the tournament, the Aggies defeated the Horned Frogs and also took down the last perfect bracket.
The statements provided herein are based solely on the opinions of the Osaic Research Team and are being provided for general information purposes only. Neither the information nor any opinion expressed constitutes an offer or a solicitation to buy or sell any securities or other financial instruments. Any opinions provided herein should not be relied upon for investment decisions and may differ from those of other departments or divisions of Osaic Wealth, Inc. or its affiliates.
Certain information may be based on information received from sources the Osaic Research Team considers reliable; however, the accuracy and completeness of such information cannot be guaranteed. Certain statements contained herein may constitute “projections,” “forecasts” and other “forward-looking statements” which do not reflect actual results and are based primarily upon applying retroactively a hypothetical set of assumptions to certain historical financial information. Any opinions, projections, forecasts and forward-looking statements presented herein reflect the judgment of the Osaic Research Team only as of the date of this document and are subject to change without notice. Osaic has no obligation to provide updates or changes to these opinions, projections, forecasts and forward-looking statements. Osaic is not soliciting or recommending any action based on any information in this document.
Securities are offered through Securities America, Inc., a broker-dealer and member of FINRA and SIPC. Advisory services are offered through Securities America Advisors, Inc. Investment Service Center and the Securities America companies are not affiliated. [6503112]