OT: 529 question

[RUaMoose_rivals]

Suppose your kid doesn’t go to college. Can you move the money to an IRA or something? Looking to avoid the 10 percent penalty. And I know you can transfer it to a grandkid. I don’t have any.

 

[T2Kplus20]

Suppose your kid doesn’t go to college. Can you move the money to an IRA or something? Looking to avoid the 10 percent penalty. And I know you can transfer it to a grandkid. I don’t have any.

Yes, you can now do the following based on the recent passing of the SECURE 2.0 act:

529 Plans: After 15 years, 529 plan assets can be rolled over to a Roth IRA for the beneficiary, subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000. Rollovers cannot exceed the aggregate before the 5-year period ending on the date of the distribution. The rollover is treated as a contribution towards the annual Roth IRA contribution limit.

While SECURE 2.0 provides increased opportunities to save for retirement, everyone's financial situation is different. As always, consult your financial advisor or tax professional to understand how SECURE 2.0 changes apply to you.

https://www.fidelity.com/learning-center/personal-finance/secure-act-2

 

[DHajekRC84]

Oh darn it's not the CE forum so I'll have to bite my tongue.

 

[RUaMoose_rivals]

Yes, you can now do the following based on the recent passing of the SECURE 2.0 act:

529 Plans: After 15 years, 529 plan assets can be rolled over to a Roth IRA for the beneficiary, subject to annual Roth contribution limits and an aggregate lifetime limit of $35,000. Rollovers cannot exceed the aggregate before the 5-year period ending on the date of the distribution. The rollover is treated as a contribution towards the annual Roth IRA contribution limit.

While SECURE 2.0 provides increased opportunities to save for retirement, everyone's financial situation is different. As always, consult your financial advisor or tax professional to understand how SECURE 2.0 changes apply to you.

https://www.fidelity.com/learning-center/personal-finance/secure-act-2

After 15 years of opening it? Think I opened it in ‘96 when they were born

 

[tom1944]

It can be used for vocational training also. Like cosmetology school etc.

 

[T2Kplus20]

After 15 years of opening it? Think I opened it in ‘96 when they were born

Yeah, I guess they don't want parents to flip the money to their kids too quickly!

 

[RUaMoose_rivals]

It can be used for vocational training also. Like cosmetology school etc.

I am aware of that. In fact used part of it for one of my son’s CDL

 

[Source]

• Starting on Jan. 1, 2024, up to $35,000 of leftover funds in a 529 account can be rolled over into a Roth IRA account, if the fund is at least 15 years old.

More at:

https://www.investopedia.com/terms/1/529plan.asp

 

[RU Cheese]

it's a nice perk but $35k isn't exactly a ton, unless you can roll it over into 2 IRAs?