Timothy Sumer

529 to Roth IRA Rollover One big change from Secure Act 2.0 was the allowance of money to be rolled from a 529 account to a Roth IRA beginning in 2024. There’s a lot of fine print, which we’ll cover in a minute. But if you do everything correctly, you will be able to transfer up to $35,000 in your lifetime from a 529 account to your Roth IRA. That lifetime $35,000 limit is per person. And, you can do this transfer regardless of your income. Which is a big potential benefit for high income households who earn too much to be able to do regular Roth IRA contributions. Here’s the fine print you need to know about in order to take advantage of this. First, the 529 must have been opened for 15 years before you do the transfer to a Roth IRA. And, no 529 contributions, or earnings from contributions from the last 5 years are allowed to be transferred. Next, the owner of the Roth IRA must be the beneficiary of the 529. Most 529s are set up with a parent or grandparent as the...

I had NO clue that distributions from Roth IRAs are used on your FAFSA and can affect your ability for need-based aid. But they do! Let me repeat that. ..Distributions from Roth IRAs are used in your FAFSA as a way to determine how much your Expected Family Contribution (EFC) is. Thus, if you have a Roth and thought you could pull from it, tax free, well you'd be right... BUT, that doesn't mean this is a good idea. Not if you think you can get need based aid. In fact, when I was researching the benefits of the Roth for my book, 21 Reasons You NEED A Roth IRA I was thinking the Roth would be a wonderful account to use for college funding. Well it CAN be but you've got to tread carefully here. The Fafsa form is about 2 years behind. Thus, here it is 2018 and we have to show our 2016 tax forms to the colleges my daughter is thinking of attending. So, what we did in 2016 is what matters, even though it's not 2018. So, if you took distributions fro...