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Started By
Message
Does anyone have details of converting 529 to Roth ira
Posted on 1/23/26 at 8:27 am
Posted on 1/23/26 at 8:27 am
I had put funds for my kid's education but luckily he earned a full ride to Ga Tech. Trying to figure out how to get the money out without penalty.
8
Posted on 1/23/26 at 8:39 am to Barkbowwow
Can't help you, if you're set with your decision.
But I'm pretty sure you don't want to do that.
But I'm pretty sure you don't want to do that.
Posted on 1/23/26 at 8:44 am to Barkbowwow
I’d leave it in case he goes to grad school or incurs some other educational expenses that the scholarship doesn’t cover.
Here’s Grok’s summarized response:
Here’s Grok’s summarized response:
quote:
Yes, under the SECURE 2.0 Act (effective 2024), you can roll over funds from a 529 plan to a Roth IRA (not traditional IRA) tax- and penalty-free if owned by the beneficiary. Key requirements: 529 open for 15+ years; funds in plan for 5+ years; direct transfer; beneficiary has earned income = rollover amount; annual limit matches Roth IRA cap (e.g., $7,000–$7,500); lifetime cap $35,000. This avoids taxes/penalties on unused education funds, but consult a tax advisor for nuances. Rules unchanged as of early 2026.
This post was edited on 1/23/26 at 2:50 pm
Posted on 1/23/26 at 10:23 am to FieldEngineer
quote:
I’d leave it in case he goes to grad school or incurs some other educational expenses that the scholarship doesn’t cover.
This right here. Full ride does not equal $0 out of pocket. Without knowing the details of what he actually received, there are types of "full ride". Not every full ride is 100%, check out the financial details and compare with cost of attendance calculator.
If it is a legit 100%, you have to also leave open the possibility GT is not where he graduates from and the transferring school might not offer the same financial situation.
Then as FieldEngineer mentioned, post graduate school may come up, or career and/or credentialing programs which would be covered.
If he is a Senior in HS right now, there is zero reason to convert to Roth right now.
Subtle brag though
Posted on 1/23/26 at 11:22 am to Barkbowwow
Congrats to him.
Definitely leave it in there until he is finished.
There are some expenses a scholarship won't cover that I believe you can use 529 funds for like laptops and internet. Might not sound like much but it adds up.
After he graduates, you can only transfer up to $35k to his roth (with stipulations). Whatever balance remains, you should leave it in and give to your grand kids.
Definitely leave it in there until he is finished.
There are some expenses a scholarship won't cover that I believe you can use 529 funds for like laptops and internet. Might not sound like much but it adds up.
After he graduates, you can only transfer up to $35k to his roth (with stipulations). Whatever balance remains, you should leave it in and give to your grand kids.
Posted on 1/23/26 at 2:26 pm to Barkbowwow
Once your child graduates then you can make the decision. But you can only do the max each year ($7,500 in 2026) and the child has to have earned income and the 529 plan needs to have been opened for 15+ years.
And for those using AI for every question that comes your way, remember you can ask for a summarized version that would make more sense when posting here.
And for those using AI for every question that comes your way, remember you can ask for a summarized version that would make more sense when posting here.
Posted on 1/23/26 at 4:41 pm to Barkbowwow
Can't you pull out the money tax free they get in scholarships? I'm clueless on the details, but I thought that was the case? I would think with a "full" ride you could easily do that?
Worst case, I'd assume you could withdraw the maximum yearly Roth contribution amount under the scholarship and contribute that to his Roth?
Worst case, I'd assume you could withdraw the maximum yearly Roth contribution amount under the scholarship and contribute that to his Roth?
Posted on 1/23/26 at 5:05 pm to Barkbowwow
I'd wait until he's done and convert to Roth to fund his first 5 years of Roth contributions after graduation. Fund 529s for grands later if you choose. They may never come besides, loading up Roth early will.set him up well, kick start his investing routine (if you involve him), and he can never get those Roth years back if not contributing. If you can swing it, funding his Roth or matching his contributions while working part time in college would be a bonus.
Posted on 1/23/26 at 6:43 pm to baldona
Nope, you’ll avoid penalties if they get a scholarship but you’ll still owe the taxes. But you can change the beneficiary to someone else.
Posted on 1/23/26 at 9:24 pm to Barkbowwow
15 years… that’s all I got
Posted on 1/24/26 at 5:54 am to Barkbowwow
You 529 plan probably has a form.
Mine was with Bloomwell.
It was fairly easy.
The monies have to be there for a period of time so you can’t just transfer money to 529 today and Roth tomorrow.
$35,000 lifetime limit. Also subject to Roth yearly limit.
You need to have a Roth in your kids name.
They need income.
I’ve done this for 2 cycles so far for both adult children.
Nice way to give them $14000 each so far.
Mine was with Bloomwell.
It was fairly easy.
The monies have to be there for a period of time so you can’t just transfer money to 529 today and Roth tomorrow.
$35,000 lifetime limit. Also subject to Roth yearly limit.
You need to have a Roth in your kids name.
They need income.
I’ve done this for 2 cycles so far for both adult children.
Nice way to give them $14000 each so far.
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