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Contributions to a Roth IRA can be withdrawn penalty-free to open a 529 plan. 529 plans allow contributions to grow tax-free and provide tax-free distributions for qualified education expenses.
The 529-plan-to-Roth-IRA rules say that you have to have had the 529 account for at least 15 years, and you can only convert funds that have been in the 529 account for at least five years.
The rule allows beneficiaries to convert a lifetime total of $35,000 from a 529 plan to a Roth IRA without incurring taxes or penalties. ... While both 529 plans and Roth IRAs offer tax benefits ...
Both Roth IRAs and 529 plans are funded with after-tax dollars — you pay tax on your income before investing in the account. With either account, your investments will grow tax-free.
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.
Here are the details on converting a 529 plan to a Roth IRA. ... Pros of converting a 529. Puts stranded 529 funds in a Roth IRA tax-free: This biggest advantage of a conversion is that you can ...
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 ...
Key takeaways. Both a Roth IRA and a 529 Plan are valid ways to save for a college education. Each has unique benefits and limitations. Starting in 2024, unused funds in a 529 account may be ...
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