Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at questions on transferring 529 plan money to a Roth IRA. (Get a free issue of The Kiplinger Tax Letter or subscribe.)
1. General rules for 529 rollover to a Roth IRA
Question: We funded a 529 college savings plan for my granddaughter. She used the money in the account for college. She’s now done with school, and there are still unused funds in the account. I heard that we can transfer some of the money to a Roth IRA for her. What are the rules for this?
Joy Taylor: Starting in 2024, some excess 529 funds can be transferred tax-free to a Roth IRA for the beneficiary in a direct trustee-to-trustee transfer. This relief, enacted in the SECURE 2.0 legislation, is subject to important rules:
- The 529 account must have been open for at least 15 years, with the same beneficiary.
- 529 contributions made in the prior five years are ineligible for the transfer.
- Annual 529 distributions for this purpose can’t exceed the annual contribution limit for Roth IRAs, which is $7,000 in 2025.
- And there is a lifetime $35,000 cap.
2. Roth IRA contributions made by beneficiary
Question: My son already contributed the maximum amount of $7,000 to his Roth IRA this year. Can we also do a direct trustee-to-trustee transfer of $7,000 from his 529 account to his Roth IRA in 2025?
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Joy Taylor: No. The annual transfer limit from the 529 to the Roth IRA can’t exceed the IRA contribution limit for the year of the rollover. Any actual contributions for the year made to any IRA (traditional or Roth) owned by the beneficiary count against this limit. For example, let’s say a 529 plan beneficiary contributes $3,000 to his traditional IRA in 2025. Only $4,000 of leftover 529 funds can be transferred to his Roth IRA in 2025. If the beneficiary has already maxed out IRA contributions in a year, then no 529 funds can be transferred to the Roth IRA that year.
3. Taxable compensation
Question: If the beneficiary of the 529 plan doesn’t have any taxable compensation for the year, can the 529 plan transfer funds to a Roth IRA in a direct trustee-to-trustee transfer?
Joy Taylor: No. Any transfer from the 529 plan to a Roth IRA must meet all the Roth IRA rules, which means the beneficiary must have taxable compensation equal to or greater than the 529 amount transferred to the Roth IRA.
4. Multiple 529 plans
Question: If a person is the beneficiary of two 529 plans, say one from a grandparent and another from a parent, can each 529 account transfer up to $35,000 to a Roth IRA owned by the beneficiary?
Joy Taylor: It doesn’t appear so. The statutory language says that the $35,000 aggregate limit on direct trustee-to-trustee transfers from a 529 account to a Roth IRA applies with respect to the designated beneficiary. Although the IRS hasn’t yet published any guidance on this, tax and financial experts believe that this means the $35,000 limit applies per person. If an individual is the beneficiary of two 529 accounts, $35,000 (and not $70,000) is the lifetime cap on direct trustee-to-trustee transfers to a Roth IRA.
About Ask the Editor, Tax Edition
Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication.
Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.
We have already received many questions from readers on topics related to tax changes in the OBBB and more. We will continue to answer these in future Ask the Editor round-ups. So keep those questions coming!
Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.
More Reader Questions Answered
- All Ask the Editor Q&As
- Ask the Editor: Reader Questions on QCDs
- Ask the Editor: Tax Questions on Roth IRA Conversions
- Ask the Editor: Reader Questions on 529 Plans
- Ask the Editor: Questions on Inherited IRAs
- Ask the Editor: Reader Questions on IRAs, RMDs and PTPs
-
3 Ways to Stretch the 2026 Social Security COLA For Your BudgetThree steps retirees can take to stretch the Social Security COLA to fit their budgets.
-
How to Keep Your Charitable Giving Momentum Going All YearInstead of treating charity like a year-end rush for tax breaks, consider using smart tools like DAFs and recurring grants for maximum impact all the year.
-
Uber Takes Aim at the Bottom Lines of Billboard LawyersUber has filed lawsuits and proposed a ballot initiative, in California, to curb settlements it claims are falsely inflated by some personal injury lawyers.
-
New 2026 Tax Change Could Mean More for Your IRA and 401(k) SavingsRetirement Savings Here's how the new IRS inflation adjustments will increase the contribution limits for your 401(k) and IRA in the new year.
-
Pickleball Injuries are Getting Out of Hand for Some AdultsAs more older adults take up pickleball, injuries are on the rise. Here's how you can lower your risk and still have a ball.
-
Are You Prepared to Live Longer? MIT AgeLab Answers QuestionsA new measure of longevity readiness indicates that for many Americans, the answer is no — and suggests what is needed to get on track.
-
Ask the Editor, November 28: Roth Conversions and Tax PlanningAsk the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on how to convert a traditional IRA to a Roth IRA.
-
Government Research Cuts Hit Older AdultsThe Trump administration has slashed funding for medical research, delaying some treatments and cures for health conditions affecting retirees.
-
4 Strategies for Older Adults to Cut Property TaxesBefore you settle your next property tax bill, make sure you're taking full advantage of these tax breaks for older homeowners across the US.
-
A Guide to Starting a Successful Business After 50Age can be an advantage for older entrepreneurs looking to extend their careers or supplement their income in retirement.
-
10 Things You Should Know About Buying a Car Today, Even if You've Bought BeforeIf buying a car is on your to-do list, and it's been a while since you went shopping for a new one, this guide will help avoid any nasty shocks in the showroom.
