Secure 2.0 – 529 to Roth

Submitted by brcwm on Thu, 2023-01-12 20:29

Two questions with these rollovers.
1) Annually limited to the allowable Roth contribution limit. Does this mean that someone can contribute their Roth contribution AND rollover from the 529? Essentially, could someone double the contribution into the Roth IRA during that year?

2) Does someone need to have earned compensation? If the rollover is limited to the annual Roth contribution limit, then that could be $0 if someone doesn’t have earned income.



Submitted by Alan - IRA critic on Thu, 2023-01-12 20:59

  1. The rollover is limited to the Roth contribution limit remaining after regular IRA contributions are made. In other word, it is not an additional limit that would allow doubling of contributions.
  2. The beneficiary of the 529 (also the Roth IRA owner), must have earned income at least equal to the rollover, however the upper MAGI income limit to make a Roth contribution does not apply to these rollovers. 
  3. Congress or the IRS will need to clarify the meaning of certain aspect of this Section including reporting conventions. There are several limitations that apply to these rollovers.

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