529 Roth IRA rollover wasn’t even in my vocabulary back when I opened a 529 plan for my daughter. I just knew I wanted her to have options. Fast-forward 15 years — she earned a scholarship, and now we’ve got extra funds sitting in that account. Like many parents in their 40s and 50s, I started asking: “Can I do a 529 Roth IRA rollover to help her retirement instead?”
Thanks to the SECURE 2.0 Act, that once-unthinkable idea is now reality — but the devil’s in the details. From 15-year holding rules to contribution caps and IRS fine print, this isn’t a plug-and-play strategy. But if you get it right? You could help your child kick-start their retirement with tax-free growth.
And while we’re on this, you might also want to understand how to roll over MYGA back to an IRA tax-free — timing matters just as much.
Let’s break it down.
Key Takeaways
You can now roll over up to $35,000 from a 529 plan to a Roth IRA tax-free — if you follow IRS rules. The account must be 15 years old, the beneficiary must have earned income, and you must stay within Roth limits.
In this article, we’ll discuss:
Understanding the 529 Roth IRA Rollover
The 15-Year Rule and Other Fine Print
The 529 Roth IRA rollover became possible under the SECURE 2.0 Act starting in 2024. But before you start transferring funds, here’s what the IRS wants you to remember:
| Rule | Requirement |
|---|---|
| 15-Year Rule | The 529 plan must have been open for at least 15 years. Changing beneficiaries resets this clock. |
| Contribution Limit | The amount you transfer counts toward the beneficiary’s annual Roth IRA contribution limit. For 2025, that’s $7,000. |
| Lifetime Max | You can roll over up to $35,000 from a 529 to a Roth IRA — per beneficiary, lifetime. |
| Tax-Free | As long as all rules are met, this rollover is tax-free and penalty-free. |
Let’s say you opened a 529 for your daughter in 2009. In 2025, assuming it’s been 15+ years and she has earned income, you could begin transferring up to $7,000 a year into her Roth IRA — up to $35,000 total over multiple years.
This is an elegant solution for overfunded 529 plans — but it’s not for everyone.
In fact, if you’re deciding between a Roth IRA and 529 to begin with, this advanced IRA rollover strategy may also help tailor your decision for better tax positioning.
Income Limits and IRS Rules for a 529 Roth IRA Rollover
529 Roth IRA Rollover Income Limits
Before jumping into a 529 Roth IRA rollover, it’s crucial to understand how income limits affect your eligibility. Even though this new rollover option offers flexibility, it still falls under Roth IRA contribution rules, and those include strict income thresholds.
To qualify for a 529 Roth IRA rollover:
- The beneficiary of the 529 plan must have earned income in the same year you do the rollover. That income must be equal to or greater than the rollover amount.
- The 529 Roth IRA rollover must also respect the IRS income phase-out limits. In 2025, the Roth IRA income limit is:
- $146,000 for single filers
- $230,000 for married couples filing jointly
So, even if your child has a well-funded 529 plan, they can’t receive a 529 Roth IRA rollover if they exceed the Roth income cap or lack earned income.
Let’s break it down with an example. Say your daughter earns $50,000 in her first post-college job. She qualifies to receive the full 529 Roth IRA rollover amount for the year — which is capped at the Roth IRA contribution limit ($7,000 in 2025). But if she takes time off or switches to part-time without pay, that rollover would have to pause.
For many parents, this becomes a strategic move: wait until your child enters the workforce, then begin the 529 Roth IRA rollover gradually.
If you’re mapping out multiple transfers over time, this rollover calculator can help visualize when to start and how much to shift each year.
IRS Rules That Govern the 529 Roth IRA Rollover
The IRS allows a 529 Roth IRA rollover, but only if very specific conditions are met. This isn’t just a tax loophole — it’s a highly structured process. If you miss even one requirement, the rollover could become taxable or disqualified.
Here’s what the IRS requires for a valid 529 Roth IRA rollover:
| IRS Rule | 529 Roth IRA Rollover Requirement |
|---|---|
| Plan Age | The 529 account must be open for at least 15 years |
| Earnings Rule | Contributions (and their earnings) made in the last 5 years are not eligible |
| Earned Income | Beneficiary must have income equal to or exceeding the rollover amount |
| Annual Limit | Rollovers must stay within Roth IRA annual contribution limits |
| Lifetime Cap | You can only roll over $35,000 total from a 529 to Roth IRA per beneficiary |
These rules make it clear: while the 529 Roth IRA rollover is tax-free, it isn’t friction-free. You’ll still need to report it properly, track limits, and make sure both your 529 plan and Roth IRA custodian handle documentation accurately.
A misstep with Form 1099-Q or over-contribution to a Roth IRA can lead to headaches — and penalties. Before making a move, it’s wise to review how the IRS treats other untaxed assets, like untaxed IRA distributions, to stay compliant.
So yes — the 529 Roth IRA rollover can give your child a head start on retirement. But you have to stay within the IRS guardrails to make it truly tax-free.
Alternatives and Timing Strategies for a 529 Roth IRA Rollover
529 Rollover to Another 529: A Flexible Option
If a 529 Roth IRA rollover doesn’t make sense right now — maybe your child hasn’t started working yet or is over the income limit — consider rolling over the 529 to another beneficiary instead.
A 529-to-529 rollover lets you transfer unused education savings to a sibling, grandchild, or even yourself without triggering taxes or penalties. This preserves your family’s options, especially if:
- One child received a scholarship and didn’t use all the funds
- You have a younger child still planning for college
- You’re considering adult education or graduate school for yourself
Changing beneficiaries does reset the 15-year clock required for a 529 Roth IRA rollover, but that may be a good thing. You can essentially restart the strategy for someone else while keeping funds in a tax-advantaged wrapper.
In our case, I moved part of my son’s 529 over to my daughter — her program cost more, and he had a surplus thanks to AP credits. That rollover bought us time and flexibility without disrupting our Roth strategy later.
This alternative is a key part of timing, especially when layered with moves like an HSA-to-IRA rollover or multi-year Roth conversions. It all works best when you coordinate the timing.
Fidelity 529 Roth IRA Rollover: What to Know if You’re With Fidelity
If your 529 plan is held with Fidelity, you’re not alone — it’s one of the largest 529 providers in the country. The good news? Fidelity supports 529 Roth IRA rollovers, but they don’t happen automatically.
Here’s what you need to know:
- The Fidelity 529 Roth IRA rollover must go into a Fidelity Roth IRA opened in the beneficiary’s name.
- You’ll need to call Fidelity or initiate the rollover via their secure messaging system. There’s no one-click rollover option yet.
- Fidelity will issue a Form 1099-Q, and your Roth IRA will report a regular contribution. You’re responsible for tracking limits.
Keep in mind: the annual contribution limit still applies, so you can only transfer $7,000 max in 2025, assuming the beneficiary qualifies.
If you’re juggling multiple Fidelity accounts — say, one Roth, one traditional IRA, and a 529 — it’s smart to map them out. Especially if you’re considering rolling a Roth from TIAA to Fidelity later. You can read about that here.
Planning your 529 Roth IRA rollover through Fidelity? Start early in the tax year. Their systems can be slower around tax season, and you’ll want time to catch errors.
What You Need To Know About 529 Roth IRA Rollover
529 to Roth IRA 15-Year Rule
One of the most misunderstood parts of the 529 Roth IRA rollover is the 15-year rule — but it’s also the most critical.
To qualify for a 529 Roth IRA rollover, the 529 account must have been open for at least 15 years. That means:
- The account’s original open date must be 15+ years before the first rollover.
- Changing the beneficiary restarts that 15-year clock.
Let’s say you opened a 529 plan for your child in 2010. In 2025, assuming no beneficiary changes, you’re in the clear to begin 529 Roth IRA rollovers — subject to all other rules.
However, if you switch that account to a niece or nephew to reuse the funds, the clock restarts. You’ll need to wait 15 years from the new beneficiary’s designation date to roll anything over to their Roth IRA.
Timing is everything — and if you’re making moves like a TIAA Roth IRA rollover, aligning all clocks matters even more.
529-to Roth IRA Income Limits
The income limits for a 529 Roth IRA rollover mirror the traditional Roth IRA contribution thresholds. For 2025:
- Single filer: under $146,000 MAGI
- Married filing jointly: under $230,000 MAGI
The beneficiary — not the account owner — must fall under these limits and have earned income to match the rollover amount.
If your child earns $5,000 in a year, you can only roll over $5,000 — even if the Roth IRA limit is $7,000. If they earn zero? No rollover.
This ensures that the 529 Roth IRA rollover supports retirement funding, not backdoor contributions for dependents without income.
529-to Roth IRA IRS
The IRS has offered preliminary guidance on the 529 Roth IRA rollover, but more detailed instructions are expected. For now, here’s what the IRS expects:
- Rollover amounts must come from contributions and earnings made at least 5 years ago.
- The beneficiary must own the Roth IRA, and the rollover counts as a contribution.
- A Form 1099-Q will be issued by the 529 plan — you’ll report this, but no tax should be owed if all conditions are met.
Remember, even tax-free rollovers require proper tracking. If you’ve ever done an IRA-to-HSA rollover, you know the importance of documentation.
FAQs
Can you rollover a 529 plan to a Roth IRA?
Yes, thanks to the SECURE 2.0 Act, you can now perform a 529 Roth IRA rollover — but only under strict conditions. The 529 account must be at least 15 years old, the beneficiary must have earned income, and the rollover amount must stay within the annual Roth IRA contribution limit. The lifetime maximum you can roll over is $35,000 per beneficiary.
This tax-free strategy can be a powerful way to repurpose unused education savings into a head start on retirement — if all rules are met.
How can I avoid paying taxes on 529 withdrawals?
To avoid taxes on 529 withdrawals, the funds must be used for qualified education expenses — such as tuition, fees, books, and room and board. But if you’re looking to avoid taxes without using the money for education, the 529 Roth IRA rollover is now a legitimate option — again, only if all conditions (15-year rule, income eligibility, contribution limits) are satisfied.
It’s also worth checking if any of the rollover options, like a MYGA back to IRA rollover, could also keep your strategy tax-free in retirement planning.
What happens if a 529 is overfunded?
Overfunding a 529 plan used to be a problem — especially if your child got a scholarship or chose not to attend college. The money would sit there, and non-qualified withdrawals triggered taxes and a 10% penalty on earnings.
Now, with the 529 Roth IRA rollover, overfunded accounts have a smarter exit. You can slowly transfer up to $35,000 tax-free into a Roth IRA in the beneficiary’s name — turning what would’ve been a mistake into a long-term win.
Is a 529 plan better than a Roth IRA?
A 529 plan and a Roth IRA serve different goals. A 529 plan is built for education savings, while a Roth IRA is a retirement vehicle. But now, with the option of a 529 Roth IRA rollover, you can bridge the two.
In other words, you no longer have to choose one or the other. You can start with a 529 for flexibility, then roll over unused funds into a Roth IRA later — assuming all rules are met. It’s one of the smartest long-term savings shifts made possible by SECURE 2.0.
And if you’re managing multiple types of accounts, consider how an FBO IRA fits into your broader wealth strategy.
Conclusion
When I first heard about the 529 Roth IRA rollover, I thought it sounded too good to be true. But once I dug into the rules — the 15-year requirement, earned income, IRS thresholds — I realized it’s not just possible, it’s powerful.
It’s the kind of strategic move I wish I’d known about when we first opened our kids’ 529s. Now? It’s one more way to turn smart planning into lifelong impact.
If you’re juggling multiple accounts, don’t forget to explore advanced IRA rollover strategies — the timing matters more than ever.
Got questions or your own 529 story? Drop it in the comments — let’s figure this retirement thing out together.
Pin your future with us—explore tips, tools, and inspiration on the Retirin Pinterest page.