529 to Roth IRA in 2024

[F0017S0]

https://money.com/529-roth-ira-rollover/

There are several restrictive rules to follow to be eligible to do this, but it could make sense for some families deciding how to save for college to take advantage when this option becomes a reality next year…

[StarTrekDoc]

What this really does allow is the relative savings error to happen and feel comfortable in fully funding a 529 with a popoff valve for anything remaining. That's the intent.

Of course, folk will optimize vehicle having no intent on 529 usage eg: a 50yo starts a 529 now for future 35k Roth money.

- albeit smaller-- pennies add up to dollars.

[The White Coat Investor]

I'm not sure the rules are really all out so I'm telling people to hold off a little bit before implementing this strategy. We need to really understand how it is going to work before committing to a multi-decade strategy like this.

[bovie]

$35k over 21 years just doesn't seem worth it, especially when it's not an extra $35k.

Minimal benefit for time and energy required to plan and track.

[F0017S0]

I'm not sure the rules are really all out so I'm telling people to hold off a little bit before implementing this strategy. We need to really understand how it is going to work before committing to a multi-decade strategy like this.

Absolutely; not everything is fleshed out here. But it is interesting because previous posters have struggled over 529 versus retirement savings for this reason.

That said, one of the explicit rules is that any leftover funds up to $35k can be rolled into the beneficiary's Roth up to the maximum contribution limit each year (per the article).

Should be interesting to see how the dust settles here, assuming there are no interim changes to the legislation...

[The White Coat Investor]

Absolutely; not everything is fleshed out here. But it is interesting because previous posters have struggled over 529 versus retirement savings for this reason.

That said, one of the explicit rules is that any leftover funds up to $35k can be rolled into the beneficiary's Roth up to the maximum contribution limit each year (per the article).

Should be interesting to see how the dust settles here, assuming there are no interim changes to the legislation...

Yes, but it seems it will take the place of your usual contribution and may require earned income. So you're not getting extra money into a tax-free account, you're just getting money in there earlier than you otherwise would. What's that really worth? Not all that much.

I expect I'll end up doing that for some of my nieces and nephews (it seems about 40% of them are getting something pretty close to full scholarships) but my kids' accounts are probably just going to change beneficiaries to the grandkids.

[GasFIRE]

Meh. We over-saved for both of our kids, roughly split evenly between 529s and taxable (separate accounts, earmarked for them). All 529 funds spent, significant taxable left over after college for both. We consider them launched now and are gifting them funds yearly from the earmarked accounts, enough for yearly BDRs and the rest up to their discretion but they do like the idea of LT investing the gift remainder and have been doing so. Much easier than trying to squeeze the last drop of tax benefit out of the government then waiting for them to determine the rules that need to be followed.