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Potential Roth IRA Rollover for 529 Plans?

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  • Potential Roth IRA Rollover for 529 Plans?

    Maybe I'm late to the game, but just read about a Congressional bill being proposed (Boost Savings for College Act; ... -bill/2869) that would permit savings from a 529 plan to be rolled over into a Roth IRA (as long as 529 has been maintained for 10 years). This seems like a huge win for those who worry about saving too much in a 529, or creating a loophole to gain a huge Roth-protected space without income limitations.

  • #2
    Looks like the one you mentioned failed in the 114th Congress with only 5 cosponsors in the Senate, and a quick search didn't show a companion bill in the House.  The present bill re-introduced as S1790.  Who knows if anything will come of it--that's not too promising of a history.  I am really not concerned about overpaying for a 529--if my kid can't use it for college or grad school, I'll either use it for my own learning, a grandkid, or just take the hit with taxes.

    In terms of the loophole...I'd be shocked if they didn't have some kind of limitation there.  If not: I'll open up a new 529 with my name, put 300k in that (max contribution limit in my state), roll my old 529 into a Roth, reassign the new account to my kid.


    • #3
      If that became law I think every high earner <50 would have to run some numbers on stopping all pre-tax retirement contributions in favor of this strategy.

      I'm not good enough w/ Excel to do this but it would be interesting as ************************.


      • #4
        Cannot see this ever becoming law. Would have to be named the Mega Giant Monster Super Duper Backdoor Roth IRA.


        • #5
          Considering most of the "tax reforms" being proposed disproportionately benefit the rich, I am not sure why it's any more ridiculous than repealing the estate tax.

          Considering Obama got shouted down when he proposed taxing 529's, maybe something going the other way will sneak through.

          Realistically, no, it would be absurd for them to pass this. However a great deal of what passes for tax reform is absurd.
          An alt-brown look at medicine, money, faith, & family