UTMA 529 rollover to Roth IRA
Dear Alan et al,
We have a 529 account that was originally a UTMA custodial account before it was rolled into a 529 for the beneficiary. Now that the beneficiary is over 21 years old, he is also the owner of the UTMA 529 account. Can he roll the proceeds into a Roth IRA using the same rules that apply to regular 529 accounts?
Thanks,
Chris
Permalink Submitted by Alan - IRA critic on Thu, 2024-11-07 15:08
Chris, moving UTMA balances to a 529 is not actually done by rollover, it would have been a taxable distribution from the UTMA and then a new cash contribution to the 529. Apparently this was done by the UTMA custodian before the beneficiary reached the age of majority.
But the 529 for this beneficiary could not fund a rollover to a Roth IRA until 15 years had passed since the first 529 contribution. Once that date has passed, the 529 to Roth rollover will be limited to the Roth IRA contribution limit for that year and would replace the regular Roth IRA contribution.