Broker Check

Unlock the Power of 529 Accounts with Dawson & Bertran Investment Advisors!

529 Conversion to a Roth IRA

529 Conversion to a Roth IRA

Considering a 529 account for your child's education? It's a wise financial move, but uncertainties can arise. What if your beneficiary opts out of college, lands a scholarship, or qualifies for employer education assistance?

We've got exciting news: Recent legislative changes offer solutions! Starting in 2024, you can convert up to $35,000 from your 529 account to a tax-free Roth IRA, owned by your beneficiary for at least 15 years. No penalties, no taxes! 

This game-changing provision is part of the SECURE 2.0 Act, reshaping the American retirement system. It doesn't stop there:

- Increase in contributions for older workers into qualified accounts.
- Adjustments to the age for required minimum distributions (RMDs).
- Younger workers can now benefit from employer matching for student loan payments and create emergency funds within qualified plans.

Discover more about the SECURE ACT 2.0 and how it can revolutionize your financial future with Dawson & Bertran Investment Advisors. 

Let's talk 529s:
- Enjoy tax advantages, including substantial gift exemptions.
- Front-load your 529 plan in 2023, offering five years' worth of annual gifts, up to $85,000 per person, per beneficiary, without gift tax implications.

Your 529 account can grow tax-deferred, with contributions up to the plan's maximum limit. While federal deductions for 529s are absent, some states offer in-state plan deductions or even tax breaks on contributions. Explore potential state tax advantages with our guidance.

Concerned about nonqualified expenses and penalties? Higher education costs are significant, but unused 529 funds could incur income tax and a 10% federal penalty. Consider a conversion to a Roth IRA through Dawson & Bertran Investment Advisors, where we help you navigate the complexities:

  • Maintain the 529 for at least 15 years.
  • Stay within annual Roth IRA contribution limits.
  • Ensure the conversion doesn't exceed total 529 contributions in the five years preceding the Roth IRA conversion distribution date.

A bonus: You can change the 529 beneficiary to an eligible individual, like a child, grandchild, or relative. However, consult a tax professional for potential gift tax implications, especially if the beneficiary belongs to a younger generation.

Trust Dawson & Bertran Investment Advisors for expert guidance on your financial journey.  Ready to seize the opportunities ahead? Choose us for a brighter financial future!

Learn more