Retirement · Education · SECURE 2.0 §126
529-to-Roth Rollover: Turning Leftover College Money Into Retirement
Your kid finished school with money left in the 529. Or the scholarship covered more than you expected. Before SECURE 2.0, leftover money not spent on qualified education faced income tax on the earnings plus a 10% additional tax. The 10% doesn't apply to the extent the withdrawal matches a tax-free scholarship (Pub. 970), though the earnings are still taxable. §126 opened a door: up to $35,000 per beneficiary can move to their Roth IRA — with real rules.
Quick answer
The 529 must be 15+ years old. Up to $35,000 lifetime can move to the beneficiary's Roth IRA. Each year is capped by the beneficiary's annual IRA limit for that year ($7,000 in 2025 and $7,500 in 2026, or $8,000 / $8,600 if the beneficiary is 50 or older), less any other IRA contributions that year, and no more than their compensation. Contributions from the last 5 years — and their earnings — can't be rolled. No income limits on the beneficiary.
The five limits, in plain English
- $35,000 lifetime per beneficiary. Not per account, not per owner. If a beneficiary already received $10,000 in 529→Roth rollovers from any account, only $25,000 remains.
- 15-year account age. The 529 must have been open at least 15 years. Whether changing the beneficiary restarts this clock is unresolved — see the honesty note below.
- 5-year lookback on contributions. Contributions made in the last five years (and the earnings attributable to those contributions) can't be rolled. Only older money is eligible.
- Annual IRA limit — shared. Each year's rollover counts against the beneficiary's own IRA contribution limit for that year ($7,000 in 2025 and $7,500 in 2026, or $8,000 / $8,600 if the beneficiary is 50 or older). If a beneficiary under 50 already contributed $3,000 to a Roth on their own in 2025, only $4,000 of rollover fits.
- Earned-income requirement. Beneficiary needs earned income at least equal to the amount rolled plus their own IRA contributions that year. Same rule that gates any IRA contribution — so on a joint return, a spouse's compensation (less the spouse's own IRA contributions) can count too (IRC §219(c), which the Roth limit incorporates).
The killer feature: no income limits
A beneficiary in their 20s or 30s who out-earns the Roth phase-outs cannot make direct Roth contributions. Normally they'd need the backdoor. But a 529→Roth rollover is not subject to the Roth MAGI phase-outs. This makes §126 quietly valuable for adult beneficiaries in high-earning first jobs.
A worked plan: $35,000 in ~5 years
Assume a 24-year-old beneficiary with W-2 wages of at least $7,000/year, no other IRA contributions, a 16-year-old 529 with $35,000 of eligible funds, and no prior rollovers. Using the 2025 IRA limit:
| Year | Rollover | Lifetime moved | Remaining |
|---|---|---|---|
| 1 | $7,000 | $7,000 | $28,000 |
| 2 | $7,000 | $14,000 | $21,000 |
| 3 | $7,000 | $21,000 | $14,000 |
| 4 | $7,000 | $28,000 | $7,000 |
| 5 | $7,000 | $35,000 | $0 |
At the 2026 limit of $7,500, the same $35,000 moves in four rollovers of $7,500 and a fifth of $5,000. Any earned-income shortfall, own IRA contribution, or eligible-funds constraint in a given year stretches the plan out. The checker shows exactly which limit binds each year.
Mechanics: parent vs. beneficiary
- Rollover must be a trustee-to-trustee transfer — not a check to the account owner.
- The receiving Roth IRA must be in the beneficiary's name (same person listed as the 529 beneficiary).
- Parents can still be the 529 account owner and initiate the transfer, but the money lands in the beneficiary's Roth.
Honesty note: the 15-year clock and beneficiary changes.
The IRS has not definitively ruled whether changing the 529 beneficiary restarts the 15-year account-age requirement. Some plans take a conservative "yes it restarts" posture; others don't. Confirm with your plan administrator before relying on a beneficiary change to unlock a rollover.
Ready to run the numbers?
The checker shows this year's max and calls out which of the five limits is binding.
Open the 529-to-Roth Rollover CheckerFAQ
Can I roll a 529 into MY OWN Roth?
Only if you are the beneficiary of that 529. SECURE 2.0 §126 requires the Roth IRA to be in the beneficiary's name — the account owner (typically the parent) can't roll to their own Roth unless they're also listed as beneficiary.
Does my kid need a job for this?
Yes. Each year's rollover counts against the beneficiary's annual IRA contribution limit, and the beneficiary needs earned income at least equal to the amount rolled plus their own IRA contributions that year — same earned-income rule as any IRA contribution. On a joint return, a spouse's compensation can count too (IRC §219(c), which the Roth limit incorporates).
Do Roth income limits block the rollover?
No. This is the key differentiator: there are no MAGI limits on the beneficiary for a 529→Roth rollover. A high-earning adult beneficiary who is phased out of direct Roth contributions can still receive these rollovers.
Does changing the 529 beneficiary reset the 15-year clock?
Unresolved. The IRS has not definitively ruled on this. Practitioners are conservative pending guidance — confirm with your plan administrator before relying on a beneficiary change to trigger the 15-year requirement.
Related
Sources & References
Primary references used for this content
IRS Publication 590-A — Contributions to Individual Retirement Arrangements
IRA contribution rules; rollover treatment
View on irs.gov
IRS — Retirement topics: IRA contribution limits
2025: $7,000 ($8,000 at 50+); 2026: $7,500 ($8,600 at 50+)
View on irs.gov
IRS Publication 970 — Tax Benefits for Education
Qualified tuition programs; the tax-free scholarship exception to the 10% additional tax
View on irs.gov
SECURE 2.0 Act §126 (P.L. 117-328) — Rollover from 529 to Roth IRA
Statutory basis for 529→Roth rollovers, effective 2024
View on congress.gov
✓4 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.