Columbus, OH – Starting Jan. 1, 2024, Ohio’s 529 Plan, CollegeAdvantage, will add a new qualified withdrawal for these higher education saving accounts. This new tax-free distribution will allow any unused 529 funds to roll over to a Roth IRA for the same 529 beneficiary without incurring any penalty on the earnings. The 529-to-Roth Rollover is subject to the certain conditions, which include, but are not limited to, the following:
- The 529 plan account must have been maintained for the 15-year period ending on the date of the 529-to-Roth Rollover.
- The amount of the 529-to-Roth IRA Rollover may not exceed the aggregate amount contributed to the 529 program account (and earnings attributable thereto) before the 5-year period ending on the date of such rollover.
- The aggregate amount of 529-to-Roth IRA Rollovers for the same designated beneficiary may not exceed $35,000.
- The 529-to-Roth IRA Rollover must be made in a direct trustee-to-trustee transfer to a Roth IRA maintained for the benefit of the same designated beneficiary of the 529 program account (not the account owner – if different).
- Each year, the 529-to-Roth IRA Rollover will be subject to annual IRA contribution limits, minus all other IRA contributions made during the year for the same designated beneficiary. In addition, such rollovers may not exceed the amount of compensation the designated beneficiary earned during the year.
- Roth IRA income limitations are waived for 529 plan rollovers to Roth IRAs.
The above information regarding 529-to-Roth Rollovers is based on a good faith interpretation of the newly enacted federal legislation. The IRS may issue additional guidance that may impact 529 plan account rollovers to Roth IRAs, including the above referenced conditions. Always consult a financial professional or tax advisor regarding the applicability of these rollovers.
This new benefit addresses a concern of what to do with the 529 funds if your child decides not to pursue their higher education. With the new Roth IRA rollover option, families can take their 529 education savings and give their child a jumpstart on their retirement savings.
Ohio’s 529 Plan has been an active community partner in central Ohio with the Columbus Blue Jacket Foundation’s Book Jackets, Columbus Metropolitan Library’s Summer Reading Challenge and Kindergarten Success Camps, the CD92.9 Andyman-A-Thon For The Kids and Ohio History Connection’s Ohio History Day, among others.
About Ohio’s 529 Plan, CollegeAdvantage:
Ohio’s 529 Plan is offered and administered by the Ohio Tuition Trust Authority (OTTA), a state agency under the Office of the Chancellor of the Ohio Department of Higher Education. Ohio is the seventh-largest state sponsor of 529 plans in the country. Ohio’s 529 Plan is offered as the CollegeAdvantage Direct 529 Savings Plan and the Blackrock CollegeAdvantage 529 Plan, which is offered and marketed through BlackRock and sold through professional financial advisors. Learn, plan, and start for as little as $25 today with Ohio’s 529 Plan at CollegeAdvantage.com