The new SECURE 2.0 Act of 2022 has many retirement-friendly options to assist with boosting taxpayer retirement savings. One of these is the new 529-to-Roth IRA rollover transfer, which goes into effect in 2024. There are specific rules to follow as follows:
- Lifetime Maximum transfer for a 529 beneficiary is $35,000.
- The 529 account must have existed for at least 15 years.
- No contributions or earnings in the 529 account from the 5 years before the transfer can be transferred to the Roth IRA
- Transfers are subject to annual Roth IRA contribution limits (but no upper-income restraint):
- $6,500 for 2023, $7,500 if the beneficiary is 50 or older
- other direct Roth IRA contributions made during the year reduce the 529 transfer amount allowed
- Must have earned income equal to or greater than the Roth IRA transfer
- $6,500 for 2023, $7,500 if the beneficiary is 50 or older
The following article from the Journal of Accountancy has great examples of timing and income requirements.
