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!