SECURE Act 2.0: 529-to-Roth IRA Rollover Limits and Deadlines

Under the SECURE 2.0 Act, the 529 to Roth IRA rollover rules let a 529 plan’s beneficiary move unused college savings into their own Roth IRA, tax-free and penalty-free, up to a $35,000 lifetime cap. The option became available for distributions after December 31, 2023, and it’s now a permanent part of the tax code.¹ The rules that decide whether a specific account qualifies are strict, and a few of them catch families off guard.

Who Qualifies for the Rollover

Four conditions have to line up before a dollar can move.

The account must be at least 15 years old for the current beneficiary. The 15-year clock runs from when the 529 was established for that specific person, not from when it was first funded.² An account opened in 2010 for a child now in their twenties clears the bar; one opened in 2015 won’t be eligible until 2030.

Contributions from the last five years are frozen. Anything paid into the 529 within five years of the rollover date, plus the earnings on those contributions, cannot move. This blocks the strategy of dropping fresh money into a 529 and immediately laundering it into a Roth.²

The Roth IRA has to belong to the 529 beneficiary. A parent or grandparent who funded the account cannot roll the money into their own Roth. If the beneficiary is a 22-year-old graduate, that graduate needs to open a Roth IRA in their own name to receive the transfer.²

The beneficiary needs earned income. The rollover amount in any year can’t exceed the beneficiary’s earned income for that tax year. A full-time student with a $4,000 summer job can only move $4,000 that year, no matter what the annual cap allows.

Changing the Beneficiary Probably Restarts the Clock

The statute requires the account to have been “maintained for the designated beneficiary” for 15 years. That language strongly suggests switching the beneficiary resets the 15-year count for the new person. An account open 12 years under one child’s name, then rerouted to a sibling, would likely have its clock restart at the transfer date for that sibling.

The IRS has not issued formal guidance settling this. Until it does, the safer assumption is that a beneficiary change is a reset. If you’re thinking about using the rollover, don’t switch beneficiaries on an account that’s approaching year 15.

How Much You Can Move

Two ceilings apply at once. The lifetime cap is $35,000 per beneficiary, counted across every 529 account they’ve ever had. Opening a second plan in a different state doesn’t create a second $35,000 bucket.²

The annual cap is the standard Roth IRA contribution limit for the year. For 2026, that base limit is $7,500.³ At that pace, hitting the $35,000 lifetime maximum takes at least five years of consecutive rollovers.

One detail trips people up. The 529 rollover and any regular Roth contributions the beneficiary makes in the same year share the annual limit; they don’t stack. If the beneficiary puts $3,000 of their own paycheck into their Roth in 2026, only $4,500 is left for a rollover that year. The statute reduces the rollover ceiling by contributions made to “all individual retirement plans” for the beneficiary during the tax year.² Coordinate the two if you’re trying to maximize.

Income Limits Don’t Block the Rollover

High earners are normally phased out of Roth contributions altogether. In 2026, the phase-out begins at $153,000 for single filers and $242,000 for married couples filing jointly.³ Those thresholds don’t apply to 529-to-Roth transfers. The tax code raises the income-limited contribution amount by the rollover amount, which neutralizes the phase-out for these transfers specifically.⁴ A beneficiary earning $200,000 can still receive one.

What Happens If You Go Over

Excess amounts aren’t simply refused. Anything above the annual or lifetime cap is treated as an excess Roth IRA contribution, which triggers a 6% excise tax for each year it stays in the account.⁵ The penalty compounds every year until the excess comes out. Catching the mistake before the tax filing deadline and withdrawing the excess plus its earnings avoids the tax, but the correction process is fussy enough that professional help is worth the fee.

How to Complete the Transfer

The move has to be a direct trustee-to-trustee transfer. The 529 plan administrator sends the funds straight to the Roth IRA custodian, and the money never touches the beneficiary’s bank account.² Pulling the cash yourself and then depositing it into the Roth breaks the rollover treatment. The IRS would call it a non-qualified 529 distribution and charge income tax plus the 10% penalty on the earnings.

The steps in order:

Open the Roth IRA in the beneficiary’s name first. The 529 plan needs a real account to send money to.
Ask the 529 plan administrator for a rollover form specifically for 529-to-Roth IRA transfers. A general withdrawal form usually won’t do the job.
Fill in the Roth IRA account number, the receiving institution’s name, and the beneficiary’s identifying details. Names on both accounts have to match exactly.
Submit and wait one to three weeks, depending on the plan. Some accept online forms; others still want paper.
Confirm with the Roth IRA custodian that the funds landed and were coded as a 529 rollover, not as a regular contribution. A coding error causes problems at tax time.

The Prior-Year Deadline

A 529-to-Roth rollover can follow the same deadline as a regular Roth contribution. A distribution taken in January and received by the Roth custodian before April 15 can be designated as a contribution for the previous tax year.⁶ Processing time is the real risk. A request submitted in late March may not clear before April 15, so start early if the tax year designation matters.

Tax Reporting

The 529 administrator issues Form 1099-Q for any distribution, including rollovers. For these transfers, box 4b on the form should be checked to flag a direct trustee-to-trustee transfer to a Roth IRA for the beneficiary, who appears as the recipient rather than the account owner.⁷ The rollover amount isn’t reported as taxable income on the beneficiary’s return. Keep the 1099-Q with records showing the account’s opening date and contribution history; if the IRS questions the 15-year or 5-year math, the burden of proof sits with the beneficiary.

State Taxes Are a Separate Question

Federal law treats a qualifying rollover as tax-free. Not every state has conformed. In non-conforming states, the transfer may be treated as a non-qualified 529 distribution for state purposes, with state income tax and possibly a state penalty on the earnings.

States that gave a deduction for the original 529 contributions may also try to recapture that deduction when the money leaves for a non-educational purpose, even when the federal side is clean. Call your state’s tax authority or your 529 plan administrator before you initiate the transfer. A surprise state tax bill after the money has moved is a common and completely preventable outcome.

1
Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements
2
Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs
3
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
4
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
5
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
6
Invest529. What You Need to Know about Roth IRA Rollovers
7
Internal Revenue Service. Instructions for Form 1099-Q – Payments From Qualified Education Programs (Under Sections 529 and 530)