What You Need to Know Before Rolling Over a 529 Plan

If you have unused funds in a 529 college savings plan, a recent change in federal law may offer a valuable new option: rolling those funds into a Roth IRA. The SECURE 2.0 Act, which took effect in 2024, now allows certain 529 plan beneficiaries to transfer funds into a Roth IRA—potentially turning leftover education savings into long-term retirement investments.

Before you start the rollover process, there are a few key rules to understand:

Account Age: The 529 account must have been open for at least 15 years

Fund Age: The funds being rolled over must have been in the account for at least 5 years.

Contribution Limits: Annual rollovers are limited by Roth IRA contribution limits—$7,000 for most individuals in 2024, or $8,000 if you're 50 or older.

Lifetime Cap: You can roll over a total of up to $35,000 from each 529 account.

Beneficiary Match: The rollover must go into a Roth IRA in the name of the 529 plan beneficiary.

No Income Limits: Unlike typical Roth IRA contributions, this rollover is not subject to income restrictions.

To initiate the rollover, contact your financial advisor, who will work with your 529 plan provider to request a rollover check. That check will then be deposited into your Roth IRA.

If you don’t have a financial advisor or an active Roth IRA, don’t worry. The experienced team at Aurora Financial Strategies is here to help. Whether you’re looking to open a Roth IRA or navigate the rollover process, Aurora offers personalized guidance to make the most of your education savings. Contact Aurora Financial Strategies today to get started.