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Next Gen Econ > Personal Finance > Retirement > How to Convert a 529 Plan to a Roth IRA
Retirement

How to Convert a 529 Plan to a Roth IRA

NGEC By NGEC Last updated: July 2, 2025 8 Min Read
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A new opportunity has emerged for families with leftover college savings: converting 529 plan funds to a Roth IRA. Previously, withdrawing 529 funds for non-educational expenses meant facing income tax and a 10% penalty on earnings, creating a dilemma for families whose children received scholarships or chose not to attend college. But thanks to the SECURE 2.0 Act passed in December 2022, beneficiaries can now redirect up to $35,000 of unused education savings toward retirement. This provides a tax-advantaged alternative to traditional withdrawal options, though it’s necessary to meet specific requirements to take advantage.

Who’s Eligible to Convert a 529 Plan to a Roth IRA?

For those considering the option to convert a 529 plan to a Roth IRA, timing matters significantly. The 529 account must have been established for at least 15 years before any funds can be transferred to a Roth IRA. This waiting period is to ensure the educational savings vehicle is used as intended for a substantial period before the funds are repurposed.

Additionally, the beneficiary of the 529 plan must be the same person who will own the Roth IRA receiving the funds. This requirement prevents families from shuffling money between different family members to circumvent contribution limits. The rule maintains the original intent of helping the same individual transition unused educational funds toward retirement security.

Only contributions and earnings from those contributions are convertible to a Roth IRA. Any funds that came from previous 529 rollovers are ineligible for conversion. Additionally, contributions made within the last five years, along with their associated earnings, are not convertible, creating another timing restriction to consider.

Unlike direct Roth IRA contributions, which have income eligibility restrictions, the eligibility to convert a 529 plan to a Roth IRA is not subject to income limits. This creates an opportunity for high-income earners who may otherwise be ineligible to make direct Roth contributions due to income limits. However, it’s still necessary to meet all other conversion requirements regardless of income level.