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William Orr, CRPC®
Financial Planner
WillO Financial Solutions
8888 Keystone Crossing, Suite 500
Indianapolis, IN 46240
Phone: 317-708-5589
Cell: 317-750-9964
Email: william.orr@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.
Life insurance is issued by The Prudential Insurance Company of America, Newark, NJ, and its affiliates. WillO Financial Solutions is not affiliated with Prudential Financial. WillO Financial Solutions sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. WillO Financial Solutions is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. WillO Financial Solutions and its representatives do not render tax or legal advice. Please consult your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255.
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