“Did You Overfund
a Section 529 Plan?
Consider a Roth IRA Rollover”
To get my complete article
with all the details…
Looking for a great way to help pay for a childs’, or other family member’s, college education?
Consider establishing a Section 529 college savings plan.
These plans are not federally tax-deductible (they are deductible in many states).
What’s more, 529 savings plans grow federally tax-free and can be withdrawn tax-free to pay for higher education expenses. [Up to $10,000 can also be withdrawn, tax-free, to pay for K-12 school tuition or to pay off school loans.]
But what happens if you establish and fund a Section 529 college savings plan for a child, grandchild, or other family member, and he or she doesn’t use all the money or decides not to go to college at all?
What do you do with the money in an overfunded 529 plan?
- If you want to keep tax-free treatment for withdrawals, you can change the Section 529 plan’s designated beneficiary to another qualified family member.
- Or you can roll over the money to the Section 529 account of another qualified family member.
- But now in 2024, as a result of the SECURE 2.0 Act passed in 2022, you have yet another alternative: roll over the money into a Roth IRA for the original beneficiary.
You can transfer up to $35,000
to this kind of an IRA, tax-free.
When the beneficiary turns 59 1/2, he or she can withdraw any of the money tax-free for any purpose. By that time, the Roth IRA could be worth hundreds of thousands of dollars!
Uncle Sam has a lot to say about all this.
Since we are dealing with the IRS you can be sure that there are many rules and regulations that govern Roth IRAs of this kind.
Yes. Things get rather complex, but this rollover opportunity may be a perfect solution for you under certain circumstances.
That’s why it’s so important for you to take a moment and…
CLICK HERE to read my completely new article titled:
“Did You Overfund a Section 529 Plan?
Consider a Roth IRA Rollover”