What do you do with leftovers? They may go to waste if you’re not careful. Suppose your leftovers are in the form of unused funds in a tax-advantaged Sec. 529 college savings plan for one of your kids or grandkids. When withdrawals aren’t used for qualified education expenses, the portion attributable to earnings generally will be subject to tax and a 10% penalty. The SECURE 2.0 Act provides possible relief: As of Jan. 1, 2024, you can roll over up to $35,000 of unused 529 funds into a Roth IRA without tax or penalties. The 529 plan must have been open for more than 15 years, and the Roth IRA must be in the name of the account beneficiary. Additional rules apply, so contact us for guidance.
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