Beneficiaries of 529 college savings accounts may make direct trustee-to-trustee rollovers from a 529 account in their name to their Roth IRA without tax or penalty. This provides an option for 529 accounts that have a balance remaining after the beneficiary’s education is complete. The 529 account must have been open for more than 15 years. The rollover can’t exceed the aggregate amount contributed to the account (and earnings thereon) more than five years before the rollover. Aggregate rollovers under the provision can’t exceed $35,000 over the beneficiary’s lifetime. Rollovers are subject to the Roth IRA annual contribution limits, but the limit based on the taxpayer’s adjusted gross income is waived.
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About Richard (Dick) Jacobs, CPA
Dick is a director at Meadows Urquhart. More about Dick.