"Effective January 1, 2024, unused 529 funds can be rolled directly into a Roth IRA for the beneficiary, up to $35,000 over a lifetime, with no income tax and no penalty on the rolled amount."
"The mechanics are straightforward, but the rules are specific as a 529 account must have been opened for at least 15 years, and any contributions made within the past five years, along with the earnings on those contributions, are not eligible to be rolled over."
"The lifetime cap is $35,000 per beneficiary, regardless of how many 529 accounts exist in their name. That means the full benefit is reached over five years at $7,000 per year, assuming the grandchild has sufficient earned income each year."
Effective January 1, 2024, unused 529 plan funds can be rolled into a Roth IRA for the beneficiary, up to $35,000 over a lifetime without taxes or penalties. The 529 account must be open for at least 15 years, and contributions made within the last five years are ineligible. The annual rollover cannot exceed the Roth IRA contribution limit, and the beneficiary must have earned income. This provides a significant planning opportunity for families with unused 529 funds.
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