How to Make the Most of a 529-to-Roth IRA Rollover

Written by Chad Conner, April 2025

To maximize the benefits of this option, here are a few strategies to consider:

1. Plan Contributions Carefully: Consider your contributions over time to avoid overfunding a 529 if you anticipate education costs will be covered. With the 529-to-Roth option, it’s possible to allocate any excess funds toward retirement.

2. Start Early: Opening a 529 plan as early as possible helps ensure the account meets the 15-year requirement by the time the beneficiary may need it. Additionally, early contributions can benefit from years of growth, whether they are ultimately used for education or retirement.

3. Use Rollover Amounts Strategically: Remember that rollovers are subject to annual Roth IRA contribution limits. If the beneficiary has other income sources, balance the 529 rollover with other retirement contributions to maximize the beneficiary’s retirement savings each year.

4. Consider Career Planning: If the beneficiary is working while in school or early in their career, they may already have earned income, allowing for Roth contributions. The 529-to-Roth option gives additional flexibility, particularly in years when they may not be able to max out their Roth IRA contribution with traditional income alone.

Is a 529-to-Roth IRA Rollover Right for You?

The 529-to-Roth rollover is a groundbreaking feature that significantly increases the utility of 529 plans. For families who are concerned about overfunding a 529 or who want to create a multi-purpose investment that benefits both education and retirement, this new option is worth exploring. By using 529 funds to kickstart a Roth IRA, you can extend the value of your savings to cover both educational and future financial goals, helping the beneficiary work toward long-term success.

This feature makes the 529 plan even more versatile, allowing families to save confidently, knowing that unused funds won’t go to waste. With thoughtful planning, a 529 plan can become a multi-generational tool, providing both educational and retirement benefits.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.​

A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.