A 529 Plan Can Fund Future Retirement

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This type of financial planning can be incorporated into your estate plan.

Maximize Your 529 Plan for Retirement Savings

A 529 savings plan is often seen as a tool for funding college, but thanks to recent changes, it can also help your child save for retirement. Funds from 529 savings plans can be rolled over into Roth IRAs, but you’ll need to meet a few requirements.

If you’ve been reluctant to open a 529 savings plan because you’re unsure whether your child will attend college or you’re concerned about having excess money in your account, this rule might offer some peace of mind: funds from 529 savings plans can be rolled over into Roth IRAs.

A Roth IRA is known for its special tax benefits–you pay taxes on upfront contributions, your investments grow tax-free, and you don’t pay taxes when you take withdrawals in retirement.

When you open a 529 savings plan, you’ll be given different investment options, like portfolios based on the age of the beneficiary and your risk tolerance. Like target-date funds, these portfolios may shift the investment allocation into more conservative assets as the beneficiary approaches college age.

Funds in a 529 grow tax-deferred, and many states offer deductions or credits for contributions. In 2025, you can contribute up to $19,000 per year without triggering the federal gift tax.

529 Plan Requirements for Retirement Rollovers

There are many rules and requirements that apply to these rollovers:

  • The 529 savings plan must be open for more than 15 years
  • You can’t convert any 529 savings contributions from the last five years
  • You can’t rollover more than $35,000 in a lifetime
  • The amount you roll over in a year cannot exceed the annual Roth contribution limit
  • You must have earned income that is at least equal to the amount you roll over in a year
  • The 529 savings plan can only be converted to a Roth account for the same beneficiary

A 529 savings plan remains a powerful way to save for a child’s education, offering tax-deferred growth and tax-free withdrawals for qualified expenses. Now, unused funds can help jumpstart your child’s retirement by rolling over into a Roth IRA.

This type of financial planning can be incorporated into your estate plan. A solid estate plan minimizes tax obligations, protects assets, and ensures the follow-through of directives. Planning for the future sets the stage for smooth transitions with minimal disruption, especially during emotional and difficult times. At AJM&A, Ltd. we provide clients with guidance using our on the technical skills and objectivity. Our professional and personal life experiences have established this firm as a valuable business and wealth preservation resource. Contact us to schedule a consultation.