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Converting an IRA into a 529 savings plan could help you leverage state tax incentives and save money. However, you may be penalized for moving the funds from one type of account to the other.
Converting a Roth IRA to a 529 requires you to withdraw money from your Roth and use it to fund a 529. But before you do this, you should understand some potential drawbacks.
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. ... You can fund a 529 plan now and convert a sizable chunk ...
One of the most significant was the 529-to-Roth IRA conversion option, which has gone into effect this year. Essentially, it lets families transfer unused 529 plan funds into a Roth IRA .
Converting a 529 to a Roth IRA allows the money to continue growing tax-free. While Roth IRA owners typically have to be age 59.5 before they can begin making penalty-free withdrawals, the IRS ...
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.
Key rules apply to the conversion: The 529 plan must be open for at least 15 years before it can be rolled over into a Roth IRA and there’s a $35,000 lifetime limit on rollovers.
How to convert a 529 plan to a Roth IRA The SECURE Act 2.0 has shaken up a number of government-sponsored financial plans, not least of which is the 529 education savings plan .
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