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Kahn, Berman, Solomon Taibel & Mogol, P.A.

307 International Circle, Suite 620

Hunt Valley, MD 21030-1487

 

Phone: 410-308-0300

Fax:     410-308-0303

 

Email: info@kbstm.com

Website: www.kbstm.com

June 2024

Start Your College Grad on the Path to Becoming a Millionaire

Start Your College Grad on the Path to Becoming a Millionaire

You may be able to do this utilizing any unused funds in the student’s 529 Plan. The IRS now allows rollovers of these funds to a Roth IRA in the child’s name.


REQUIREMENTS
You must have owned the 529 account for at least 15 years before rollovers are allowed. Contributions made in the five years before distributions start — including the associated earnings — are ineligible for a tax-free rollover. Rollovers can't exceed the 2024 annual Roth contribution limit ($7,000/$8,000 for ages 50 and older).


The lifetime 529 rollover limit is $35,000, so you’d have to do a rollover annually for several years. As the owner of the Roth IRA, your graduate must have earned income at least equal to the amount of the annual rollover.


THE MILLIONAIRE PART
Look at the hypothetical example (chart) of making rollovers of $35,000 in remaining funds over five years. It assumes the annual contribution limit remains $7,000, your child makes no additional contributions, and the IRA earns a hypothetical 7% compounded interest monthly for 45 years. Consult your tax advisor about your situation.


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