529 to Roth Rollover Question
I know there are several qualifications for being able to roll funds from a 529 to a Roth. My specific question is regarding the earned income requirement. As I understand, the beneficiary would have to be eligible to contribute to a Roth IRA for the given year (earned income up to $7k), but does the income limit (the same income limit that applies to contribution eligibility) still apply?
Permalink Submitted by Alan - IRA critic on Sun, 2024-07-14 18:31
Yes, it’s the same earned income which could have otherwise been used for a regular Roth IRA contribution if not used instead to qualify for the 529 rollover.
Permalink Submitted by John Boyle on Sun, 2024-07-14 21:26
But in order to make a Roth contribution, there’s an amount of income that eliminates your ability to make the contribution. For example, if filing MFJ, you cannot make a Roth contribution if your MAGI is over $239,999. My question is whether that income limit still applies when doing the 529 to Roth rollover. I read somewhere that the beneficiary can have unlimited income and still be eligible, as long as they have earned income up to the rollover amount.
Permalink Submitted by Alan - IRA critic on Mon, 2024-07-15 10:49
It’s correct that there is no upper income limit, so a high income 529 beneficiary will be eligible for the rollover(s) from the 529.