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A 529 plan can also be set up as a prepaid tuition plan, which allows you to lock in tuition at current rates but doesn’t cover room and board. The 529 to Roth IRA transfer opportunity
Section 126 of the bill amends the Internal Revenue Code so that beneficiaries of 529 plans can roll over funds from their 529 accounts to Roth IRAs tax and penalty free, effective for ...
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.
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.
Most states that close their prepaid tuition plans now administer other education savings plans instead. In Texas, the TGTP was replaced by a new prepaid plan in 2008. The Texas Tomorrow Fund will be reopened for new enrollment under a new name: [5] The Texas Tuition Promise Fund, which replaced the Texas Guaranteed Tuition Plan in 2008. [6]
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.
State. Tax Treatment of 529 Plan Contributions. California. No deduction or credit. Illinois. Maximum deduction of $10,000 ($20,000 for married joint filers) per year
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