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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

  • Writer's pictureAndrew Young

New Features Available in 2024 for 529’s and Roth IRA Rollovers

The new feature of the Secure Act 2.0 legislation allowing 529 plan account beneficiaries to roll over funds into their Roth IRA is now available starting in 2024.  You would avoid the normal 10% withdrawal penalty when funds are not used towards qualified education expenses.

 

Qualifications and limitations

As a reminder, here are the qualifications/limitations you must meet to take advantage of this feature.

  1. The account must be set up for at least 15 years before you can utilize this feature.  If you’re looking at setting up a 529 account for your kid(s), the sooner, the better with this consideration, in addition to the power of more time for compounding.

  2. The Roth IRA account holder must be the same as the 529 beneficiary

  3. There’s a lifetime cap of $35,000 per person/account owner.  So, intentionally overfunding a 529 is limited.

  4. The 529 beneficiary must have earned income to be able to roll over funds from a 529 to a Roth IRA.  The 2024 Roth IRA limits are $7,000 annually (under 50) / $8,000 (over 50).  You’re limited to the lesser of your earned income or the maximum. 

    1. For example, if you only earned $4,000, you could only roll over $4,000 from your 529 to your Roth IRA.

  5. Rollovers are subject to the annual Traditional and Roth IRA contribution limits (less if you’ve made any contributions directly);

    1. I.e., You made a $1,500 contribution to your Traditional IRA in 2024.  The Traditional/Roth IRA maximum is $7,000; you would only be able to roll over $5,500 to your Roth IRA, given you meet the other qualifications

  6. There are no maximum income limits on completing the rollover like there are for Roth IRA contributions

  7. You cannot transfer contributions and earnings made in the last five years before distributions start. 

 

Still to clarify

What still needs to be clarified by the IRS regarding the legislation:

  1. It has not been determined if you change the beneficiary of the 529 if that resets the 15-year clock. 

    1. Reminder: If there are still leftover funds for one of your 529 beneficiaries/accounts, you can always transfer the account to another family member to utilize for their education expense needs.  It isn’t known whether you could still utilize the 529 to Roth rollover feature if you do this.

  2. If you roll over funds from one 529 plan to another, it is unclear if that resets the 15-year clock to the 529 plan you are transferring them to or if some other method would be used.

 

This new feature can further emphasize school choice while removing some of the worry of having excess 529 funds or funding a 529 if a child decides not to pursue higher education or has more than they need for trade or vocational school.  The child can still benefit from your early 529 contributions by jump-starting their retirement early.

 

Whether this is something you should take advantage of depends on your family's situation. If you are looking for guidance around education planning and saving for yourself or your children, meet today with your Whitaker-Myers Wealth Managers financial advisor to help you achieve your financial goals and objectives.

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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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