Let’s Talk… the Secure Act 2.0 & 529 Plan Rollover to Roth IRAs!

A 529 plan is an investment vehicle that allows you to save for a beneficiary’s college education. If the funds are used for education expenses, the growth is tax free. Keep in mind there is an owner and a beneficiary. The owner can change beneficiaries at any time in the event the original beneficiary gets a scholarship or another beneficiary is short on college funds because they didn’t get a scholarship. 

So in the Secure Act 2.0, there is a provision that allows beneficiaries in 2024 to be able to roll 529 plan funds to a Roth IRA. This is generally good news. But here’s a catch that many people are missing. First, the 529 plan had to have been in existence for 15 years. Second, it limits the rollover to contribution limits and sets a $35K lifetime limit on what is rolled over from a 529 plan.

This is something I’m getting questions on daily and there is a major confusion. If this is something you are interested in doing, I highly suggest working with a competent financial professional and a CPA that is knowledgeable in the provisions of the Secure Act 2.0.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.