By Erin Bendig, Sept. 08, 2025

Wondering what to do with the cash locked away in your 529 plan? You may not be alone. As of June 2024 (the most recently available data), there were 16.8 million active 529 college savings plan accounts in the U.S., according to the College Savings Plans Network.

However, like some people, perhaps your child has changed their mind about attending college, or you have saved more than needed for their education. Or maybe you’ve been putting off opening a 529 plan altogether because you’re worried about tying up money in an account you were afraid you couldn’t access. Well, as a result of provisions in the SECURE 2.0 Act, you can now roll over funds from your 529 plan into a Roth IRA, as long as certain conditions are met.

Here’s what you need to know about the changes, which went into effect at the beginning of 2024.

What are the tax rules for 529 plans?

The SECURE 2.0 Act contains numerous changes to retirement-related provisions. Under Section 126 of the act, the Internal Revenue Code is amended to allow tax-free rollovers from 529s into Roth IRAs under certain conditions. By rolling over unused funds from a 529 account into a Roth IRA, individuals can avoid income tax and tax penalties that occur when withdrawing funds for non-education expenses. For this reason, we may see more families opening 529 savings accounts.

Section 126 of the SECURE 2.0 Act reads, ”Families who sacrifice and save in 529 accounts should not be punished with tax and penalty years later if the beneficiary has found an alternative way to pay for their education. They should be able to retain their savings and begin their retirement account on a positive note.”

How much can be rolled over?

There is a limit on how much money you will be able to roll over from your 529 plan to a Roth IRA. The limit for beneficiaries of 529 college savings accounts to roll over to a Roth IRA is $35,000 throughout their lifetime. However, these rollovers are subject to Roth IRA annual contribution limits. IRA contribution limits for the 2025 tax year are $7,000 for people under 50, and $8,000 for people 50 and older.

What are the limitations on 529 plan rollovers?

While the ability to rollover funds from your 529 plan to a Roth IRA can be beneficial in many cases, there are a few limitations.

• Your 529 savings account must be open for over 15 years before funds can be rolled over into a Roth IRA.
• If the 529 beneficiary is different from the 529 holder, the Roth IRA must be in the beneficiary’s name.
• 529 contributions made within the preceding five years cannot be rolled over.
• The lifetime maximum that can be rolled over is $35,000.
• The beneficiary must have earned income for the year at least equal in amount to the Roth IRA contribution transferred from the 529 account.

Last word

It can be a smart move to roll over unused 529 funds to a Roth IRA. Thanks to the SECURE 2.0 Act, you can transfer a lifetime limit of up to $35,000 from a 529 plan to a Roth IRA for the beneficiary, tax-free, if the 529 has been open for 15 years and the funds are from contributions made at least 5 years ago.

This is great to know if your child decides to skip college or you oversaved, enabling you to save the money instead for your retirement. Keep in mind that the rollover counts toward the annual Roth IRA limit ($7,000 in 2025, or $8,000 if 50 or over) and that the beneficiary needs earned income to cover the rollover amount. Also, not all states match the federal tax-free treatment, so you might owe state taxes. Check with a tax professional and watch for live updates to see if it fits your goals.