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Ashley works with clients to bring strategy, structure, clarity and confidence to their global financial lives and keep it that way. ​In 2013, Ashley founded Arete Wealth Strategists, a fee-only financial planning and investment management firm for Australian/American expatriates.
January 22, 2024

SECURE 2.0: How it affects 529 plans

Effective January 2024, SECURE 2.0, a new federal law, allows funds from an established 529 account to be transferred tax-free to a Roth IRA owned by the beneficiary of the 529 account. The goal of the SECURE Act—an acronym for Setting Every Community Up for Retirement—is to encourage saving toward retirement and to expand employee participation in retirement plans. Now, unused educational funds have the potential to kickstart a beneficiary’s Roth IRA savings.

This change, however, comes with limitations. Here is what we know:

The 529 account must have been open for at least 15 years.

The beneficiary of the 529 account and owner of the Roth IRA must be the same person.

The amount of the rollover is limited:

Annual rollovers are subject to applicable Roth IRA contribution limits.

Rollover amounts from all 529 plan accounts may not exceed $35,000.

Rollovers may not exceed the amount contributed to the 529 account (and related earnings) before the five-year period prior to the rollover.

Utah taxpayers who have previously claimed the Utah state my529 credit or deduction are subject to an addback in the amount of the rollover—to the extent it was deducted or used in calculating the tax credit on a current or previously filed Utah tax return—as income on their Utah tax return in the current tax year (i.e., the year of the Roth IRA rollover).

Source: https://my529.org/secure-2-0-how-it-affects-529-plans

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