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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.
Cons of converting a 529. Cannot be undone: “Once the money comes out of the 529 plan and goes into the Roth IRA, as we understand it today, you cannot roll it back into a 529 plan,” says Yeomans.
Many states offer tax breaks to taxpayers who contribute to 529 plans, including prepaid tuition plans. These breaks can come in the form of a tax deduction or a credit, depending on where you live.
Through a 529 Rollover, the funds from a 529 plan transition into a Roth IRA, a tax-free individual retirement account. This strategy capitalizes on benefits from both types of accounts.
A DreamAhead account can be opened with as little as $25. [4] Once opened, contributions to a DreamAhead account can be made by check, Automatic Investment Plan (AIP), Electronic Funds Transfer (EFT), Payroll Direct Deposit, Gift Contribution, [5] Rollover from another 529 account, Re-contribution of a refunded distribution, or by moving assets from a child savings or education savings account.
There’s no way to directly transfer IRA funds to a 529 plan, but in some cases, you can use IRA funds for education expenses. ... Then you can use the funds to open a 529 account, tax-free and ...
Reasons to Change Your 529 Plan Beneficiary. A 529 plan, named after Section 529 of the Internal Revenue Code, is a tax-advantaged savings plan designed to encourage saving for future education costs.
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