You might have heard some buzz about the SECURE Act 2.0 and the ability to transfer 529 funds to a Roth IRA. You may also be wondering if you can take advantage of this new rule. To help clear up some of the questions you may have, we’re offering this flowchart for you. It covers important issues such as:
- How long your 529 account has been open and funded
- Ensuring the 529 beneficiary and Roth IRA owner are correct before transferring
- How earned income, previous Roth IRA contributions, and total 529-to-Roth IRA transfer limits can impact your ability to make a transfer
- Whether a 529-to-Roth IRA transfer is the best fit for your situation
Several factors and limitations will apply in each situation. While the new flexibility may seem attractive, especially if your beneficiary’s plans for education have changed, take the time to understand each implication. If you would like to discuss this option and how it would fit in your financial plan, please let us know!
Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.
The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.
Published for the blog on December 20, 2023 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.