529 to Roth IRA Rollover
Suppose there is a $50k 529 account, and the custodian of the account would like to have it rolled over to a Roth IRA for the beneficiary (let’s assume the account meets the 15 year requirement).
Is there a limit on how much can be rolled over to the Roth in a given calendar year? Is it subject to the $7k/year Roth contribution limit? And if it is, can the owner of the Roth IRA (the beneficiary of the 529) not contribute to the Roth himself/herself in the same year?
Permalink Submitted by Alan - IRA critic on Thu, 2025-04-17 13:22
The 529 rollover replaces the Roth (and TIRA) contribution space for the year and is limited to the Roth contribution limit for the year. The beneficiary also must have earned income at least equal to the amount rolled over, but there is no maximum MAGI limit as there is for regular Roth contributions.
The Roth custodian will report the rollover as a new Roth IRA contribution on Form 5498, which enables the IRS to monitor the Roth contribution limit. If a 529 rollover was done by 4/15, the beneficiary could have assigned the rollover to 2024, leaving open the 2025 limit, but of course if a regular Roth contribution had already been made for 2024, there would be an excess contribution.