Roth IRA Rollovers
Can I make a tax-free rollover from a 529 account to a Roth IRA?
Yes. The rollover must be to a Roth IRA account in the name of the 529 plan beneficiary, not the 529 account owner/participant. In addition, the 529 plan account must have been open for a minimum of 15 years prior to the rollover. It is our understanding that 529 plan accounts opened within 15 years of the potential rollover date will not qualify as a tax-free rollover. Learn more on our Secure 2.0 information page.
Important Note: A 529-to-Roth IRA rollover may have tax consequences. The 529 Plan Participant / Account Owner and 529 Plan Account Designated Beneficiary / Roth IRA Owner are solely responsible for complying with all relevant IRS Rules, including any Guidance released by the IRS in the future. You should speak with a qualified tax professional before making a 529-to-Roth IRA Rollover.
How much can I rollover from a 529 account to a Roth IRA tax-free?
Rollover amounts are subject to the annual contribution limits applicable to Roth IRAs. These limits are set by the IRS and may change annually. Any funds that are rolled over will decrease the amount you can contribute from other sources in that tax year. Consult a financial and/or tax advisor to make sure you are within annual limits. Additionally, it is our understanding that there is a lifetime limit per beneficiary of $35,000 for tax-free 529 to Roth IRA rollovers. Learn more on our Secure 2.0 information page.
Which funds can be rolled over into a Roth IRA tax-free?
It is our understanding that funds contributed to the 529 plan more than five years before the requested rollover date (and the earnings on those contributions) can be rolled over tax-free. Learn more on our Secure 2.0 information page.
Do existing IRA compensation requirements apply to the 529 beneficiary when making a 529-to-Roth IRA rollover?
The Beneficiary/Roth IRA owner is best suited to determine eligibility in consultation with their financial or tax advisor(s). Learn more on our Secure 2.0 information page.
How do any account changes such as account owner transfers, beneficiary changes, or rollovers between 529 plans made in the last 15 years impact eligibility?
This rule has yet to be confirmed by the IRS. You should speak with a qualified tax professional prior to making a 529-to-Roth IRA Rollover. Learn more on our Secure 2.0 information page.
Can I make a tax-free rollover from a 529 account to a Roth IRA for the prior year?
This rule has yet to be confirmed by the IRS – you should speak with a qualified tax professional prior to making such an election. Learn more on our Secure 2.0 information page.
Can I roll from my 529 account into my state-sponsored Auto-IRA?
The Beneficiary/Roth IRA owner is best suited to determine eligibility in consultation with their financial or tax advisor(s). Learn more on our Secure 2.0 information page.
How do I roll a 529 account into a Roth IRA?
The necessary forms for rolling your GET or DreamAhead account into a Roth IRA can be found on our Forms page. Learn more on our Secure 2.0 information page.
Can I take a distribution from my 529 account, cash the check, and then make a check payable to my Roth IRA Custodian?
No. It is our understanding that for the rollover to be tax-free, you must request a direct Trustee-to-Trustee transfer. That means you cannot take possession of the funds. You tell us who the IRA Custodian will be, and we’ll make the check payable to them. Learn more on our Secure 2.0 information page.
What if my state doesn’t conform to the federal rule for 529-to-Roth rollovers?
There are some states that have indicated that they are nonconforming, meaning they may have state-level restrictions different than, or in addition to the federal rules. You should speak with a qualified tax professional prior to making a 529-to-Roth IRA Rollover in a non-conforming state. Learn more on our Secure 2.0 information page.
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