Conv 529 to Roth
I understand that, upon my upcoming retirement, there is a way to rollover my 529 to a Roth, but that first I will have to “park” the money in a traditional IRA. Can someone shed some light on exactly how this is done and what the tax implications are? It sounds too good to be true that I can avoid all tax on this money…
Thanks
Permalink Submitted by Bill Horan on Sun, 2008-03-09 16:37
Sorry, sorry
457, I meant to write 457, not 529! Obviously, I’m starting to confuse myself!
Permalink Submitted by Alan Spross on Sun, 2008-03-09 20:31
A 457b as well as other eligible plans can be converted to a Roth IRA starting this year by direct conversion, as well as by the usual method of transferring to a traditional IRA and then converting to a Roth from the traditional IRA. The 100,000 modified AGI limit applies until after 2009 under either method.
Also, the conversion is taxable under either method, so you are correct that it was too good to be true. Once the funds are in a Roth and the Roth meets qualification requirements, all distributions including earnings will be tax free. That’s probably the benefit you heard about.