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Can jumpstart a child’s retirement savings: Any leftover money in a 529 plan can be used to help a child get a good start on tax-free retirement savings. Cons of converting a 529.
Starting in 2024, unused 529 funds can be rolled into a Roth IRA tax-free, thanks to the SECURE 2.0 Act, giving families more flexibility with college savings.
Thanks to new rules set out in the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act of 2022, unused 529 funds can be transferred to the 529 beneficiary’s Roth IRA account.
The earnings portion of money withdrawn from a 529 plan that is not spent on eligible expenses (or rolled over into an ABLE account for any eligible family member) is subject to income tax, an additional 10% federal tax penalty, and the possibility of a recapture of any state tax deductions or credits taken. For example, if $50,000 is ...
The 529 plan must be open for at least 15 years before attempting the 529-to-Roth rollover. And funds deposited in the last five years and their associated interest are not eligible for this transfer.
A 529 Rollover to a Roth IRA is a financial strategy where an individual transfers funds from a 529 college savings plan, designed to pay for educational expenses, into a Roth IRA. This is a ...
This 'wealth transfer' to the grandkids makes things a little complicated. My wife and I saved up $73,000 in 529 college savings plans for our kids — then their grandma generously paid for ...
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