529 plans can be a great tool to use when saving for college expenses! Starting in 2024, there is a new aspect to these plans.
You will now be able to rollover a 529 into a Roth IRA owned by the beneficiary of the 529. This is a great feature for those that might have excess money after college expenses or if the beneficiary decides to not use the 529 account.
There are a few guidelines:
- There is a limit of $35,000 that can be converted
- The account must have been owned for 15 years before it can be converted.
- The IRA must be owned by the beneficiary of the 529.
This means that you can put money into the 529 without any worry of saving too much or the account not being used. Withdrawals for nonqualified expenses will result in paying taxes, so with this new change, this can be avoided.
This change comes from the Secure Act 2.0 that was signed into law in 2022. If you have questions or would like advice on this new change, feel free to contact us and we will gladly help.