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David Miller, MS, CFP®, CRPC®
Financial Advisor
CA Insurance Lic. #0G61348
Prudential Advisors
1706 Plum Lane, Suite 128
Redlands, CA 92374
Phone: 909-709-9978
Email: david.miller@prudential.com
May/June 2024
Leftover 529 Plan Funds
Congratulations, your youngest child has graduated college, and there’s money left in their 529 college savings plan.* Now, the question is what to do with that money. If you want to liquidate the account, you have several tax-advantaged choices.
You can make tax-free 529 plan distributions to pay student loan principal and interest of up to $10,000 a year for the recent grad and each of their siblings, including stepbrothers and stepsisters.
Starting in 2024, 529 education accounts can be rolled over tax-free to a Roth IRA for the 529 plan beneficiary. There’s a $35,000 cap. Rollover amounts can’t exceed the annual contribution limit for Roth IRAs ($7,000 in 2024). As the owner of the Roth IRA, your graduate must have earned income at least equal to the rollover amount. The 529 plan must have been open for over 15 years before you can do a 529-to-Roth IRA transfer.
Now through 2025, money may be rolled over from a 529 plan into an Achieving a Better Life Experience (ABLE) account or a qualified family member with disabilities to help save and pay for disability-related expenses. The current annual contribution limit is $18,000.
Discuss 529 plans with your financial and tax professionals.
*Certain requirements may apply. Before investing, read the program offering statement and consider the investment objectives, risks, charges, and expenses. These plans are not guaranteed by any state or federal agency, credit union or bank and are subject to investment risk and may lose principal.
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