July 2026 Client Profile

Emily, a high school senior, just landed a full-ride college scholarship covering every dollar of tuition, fees, books, and room and board. Her parents, Andrew and Leah, open the statement and see $75,000 still sitting in the 529 plan you started for Emily when she was born.

Under the SECURE 2.0 rule, you can roll up to $35,000 lifetime— tax- and penalty-free—straight into Emily's Roth IRA. Because the account is already 18 years old and meets the five-year holding rule, you transfer $7,500 this year (the 2026 annual limit, assuming Emily has earned income), then repeat annually until the $35,000 cap is reached. The money now works for her retirement instead of sitting idle.

For the remaining $40,000, you withdraw an amount equal to the scholarship value, avoiding the 10% penalty (though earnings are taxable as ordinary income). You can use the funds for a gap year, study abroad, or graduate program later. Andrew and Leah turned "leftover" college savings into a powerful retirement head start for Emily.

Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.