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New 2024 Law | 529 rollover to Roth IRA
Posted on 12/23/22 at 3:32 pm
Posted on 12/23/22 at 3:32 pm
Families can make a tax-free rollover from 529 plans to Roth individual retirement accounts starting in 2024
quote:
The restrictions include:
A $35,000 lifetime cap on transfers.
Rollovers are subject to the annual Roth IRA contribution limit. (The limit is $6,500 in 2023.)
The rollover can only be made to the beneficiary's Roth IRA — not that of the account owner. (In other words, a 529 owned by a parent with the child as beneficiary would need to be rolled into the child's IRA, not the parent's.)
The 529 account must have been open for at least 15 years. (It seems changing account beneficiaries may restart that 15-year clock, Levine said.)
Accountholders can't roll over contributions, or earnings on those contributions, made in the last five years.
6
Posted on 12/23/22 at 3:52 pm to lynxcat
Interesting stuff, thanks for posting.
Posted on 12/23/22 at 4:26 pm to lynxcat
Reading through that the catch seems to be that it is still limited by the annual Roth IRA contribution limit.
So every year you can move $6,500 from the 529 (your parents gifted to you, not something you can create for yourself) until you reach the $35k lifetime limit. But that seems to replace the $6,500 you normally would have been able to contribute per calendar year.
So every year you can move $6,500 from the 529 (your parents gifted to you, not something you can create for yourself) until you reach the $35k lifetime limit. But that seems to replace the $6,500 you normally would have been able to contribute per calendar year.
Posted on 12/23/22 at 4:36 pm to molsusports
quote:
So every year you can move $6,500 from the 529 (your parents gifted to you, not something you can create for yourself) until you reach the $35k lifetime limit. But that seems to replace the $6,500 you normally would have been able to contribute per calendar year.
I have a 529 for each kid.
There is money left.
So I can move it over each year?
Sounds good.
Posted on 12/23/22 at 5:02 pm to makersmark1
Sounds like it. The article doesn't specify but I assume the person adding to the Roth has to have earned at least $6,500 that year but could not be over the income limit for making a Roth IRA contribution.
Posted on 12/23/22 at 5:40 pm to lynxcat
thanks daddy government for allowing me the privilege of moving my own fricking money around
Posted on 12/23/22 at 5:41 pm to wileyjones
quote:
thanks daddy government for allowing me the privilege of moving my own fricking money around
lAnD oF tHe FrEe!!!
Posted on 12/23/22 at 7:50 pm to wileyjones
quote:
thanks daddy government for allowing me the privilege of moving my own fricking money around
More like thanks for not taxing me.
Once again, Democrats pretend to be “tax the rich” then enact something that’s completely opposite yet somehow don’t get hammered for it.
This post was edited on 12/23/22 at 7:51 pm
Posted on 12/23/22 at 8:01 pm to lynxcat
Older son just graduated. I think he has about 14k left in his. Really don't want to wait 2 years to do something with it. He got about 10k in scholarships. I'd only have to pay taxes/penalties on the $4k difference right? Maybe i'll cash it out and maybe he can use it to get started in life upgrade his vehicle or something.
Posted on 12/23/22 at 9:08 pm to wileyjones
Yes, frick these pricks
Posted on 12/24/22 at 7:20 am to wileyjones
quote:
thanks daddy government for allowing me the privilege of moving my own fricking money around
yet still takes the place of the yearly ira contribution
Posted on 12/24/22 at 8:45 am to lynxcat
Curious how it applies if I’m the account owner and beneficiary as well? I opened my 529 before I had a child.
Posted on 12/24/22 at 9:26 am to lynxcat
Just shifted my thinking a bit from 'do not overfund' the 529s.
Posted on 12/24/22 at 12:34 pm to Most Points Win
I think that’s the intent of the change.
Posted on 12/24/22 at 12:58 pm to lighter345
quote:
Curious how it applies if I’m the account owner and beneficiary as well? I opened my 529 before I had a child.
Didn't know you could do that. Won't you have to change the beneficiary to the kid at some point?
Posted on 12/24/22 at 2:45 pm to HailToTheChiz
Yup. But I can contribute before the childs born and let it grow.
Posted on 12/24/22 at 9:07 pm to wileyjones
quote:
thanks daddy government for allowing me the privilege of moving my own fricking money around
I generally appreciate the sentiment, but I also appreciate the differences in accounts.
That's like saying you should be able to move money freely between your 401k and your savings account.
The Roth IRA and 529 plans are similar enough that this makes good sense...you almost wonder why they haven't done this before?
My kid got a scholarship so he's going to have a lot left over in his 529...I'm glad he'll be able to convert it to Roth IRA.
Posted on 12/25/22 at 6:49 am to Grievous Angel
quote:
That's like saying you should be able to move money freely between your 401k and your savings account.
It's YOUR money. Why should you not be able to do this?
Posted on 12/25/22 at 4:28 pm to I Love Bama
The government gave the tax benefit…could just as easily remove that section of code.
Posted on 12/26/22 at 6:12 am to lynxcat
quote:
The government gave the tax benefit…could just as easily remove that section of code.
Thank you, lynx. I had no idea the government was in charge of tax codes.
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