Excess 529 to Roth IRA Transfer 2024

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If you have any excess 529 funds and your child/niece/nephew/grandchild has completed their undergraduate degree...then you my friend have earned my respect and I most certainly hope you subscribe to the channel. Congratulations on your amazing accomplishment.
That said, in this video I discuss many of the rules regarding your ability to convert some or all of your 529 account funds into a Roth IRA that is owned by the beneficiary...more details with my insights within the video.
Journal of Accountancy: www.journalofaccountancy.com/...
IRS Tax Benefits for Education: www.irs.gov/pub/irs-pdf/p970.pdf
Hope you found a nugget or two in this one. Cheers!
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ABOUT ME 👇
I've been involved in people's financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)...I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course...my experience as a Former Financial Advisor.
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DISCLAIMER: I am not a financial adviser or a certified public accountant. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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Опубликовано:

31 июл 2024

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Комментарии : 12

@larrysk-cuppodcast96 Год назад

Great video! Thank you for explaining this, as I couldn't find any videos talking about this new "backdoor" IRA conversion opportunity.

@Financial_Awareness Год назад

@larrysk-cuppodcast96 - Sup Larry!!!!! Appreciate you taking the time to check out this vid. Hope the info was helpful. For us, I’m grateful to have this as an option for sure. Not sure if we’ll end up actually benefiting from it (if all the funds get spent), but it’s nice to know that this option exists. What do you think? You think folks will get use this as motivation to over-save into their 529 so that there will be money left over?

@larrysk-cuppodcast96 Год назад

@@Financial_Awareness I don't think it'll motivate people to oversave in 529 accounts, but I think for those people who do save and are high income and high tax states and live in states with a state-level tax incentive, this could be really interesting.

@Financial_Awareness Год назад

Agreed!

@kierapsu86 Год назад

Hello! I’ve been watching you for a while! I am a crna, side hustle crna, and now trying to start my own business crna hahah! Trying to figure out/learn about this irrevocable and revocable trust and “borrowing” against them/insurances etc. can you do a video explaining that and the new iRS regulations against either ? Just learned about paying my kids through my business and started up an IRA account for each! Thank you!!!

@Financial_Awareness Год назад

@kierapsu86 - What's up!!! Oh my goodness, thank you for checking out several of the vids over the years - so awesome to hear and greatly appreciated! Thank you for dedicating some of your time. I'm not familiar enough regarding borrowing from a trust as you put and prob wouldn't make a video about it given that I'm not too familiar with it. Do you mean simply getting a personal line of credit against your assets? Not sure I follow, but it sounds like there's a benefit to the complexity. Do you mean borrowing against a cash value life insurance policy? Because you said insurance. Congrats on starting up an IRA for your kids - that is amazing! Will be trying to do something similar for our girls. Sounds like you're on a great path! Love your career!!!

@peacefrog0521 Год назад

I’m so looking forward to this. I set up a 529 for myself as beneficiary easily more than 15 years ago, only to get an extra benefit on state taxes. But I have no kids so it’s all just sitting there, I stopped contributing to it at least several years ago. I also have a Roth IRA in my name, and as I’m dabbling with the idea of retiring after this year anyway, moving $6500/yr (would I be able to move more per year and/or lifetime being over 50?) would put it to better use, and allow me to reinvest it in better fund choices (less costly and/or better performing and/or more aligned with my objectives). Also wondering: How would it be determined whether the transfers occur from the basis or the earnings? I know how much is basis and how much is earnings (it’s about 50/50), but I don’t think my 529 has the best lot control. I’d probably want to transfer as much if the earnings first if I could, and then liquidate the leftover basis - instead of the other way around as in your example. If I could designate to use LIFO that would probably do it, but not sure if we’ll have that option.

@TheK9Shepherd 6 месяцев назад

Don't forget. You can withdraw the monies you contributed penalty and tax free. So over the years, let's say you contributed $20k You can withdraw that $20k with no penalties or taxes. Rolling it over is great. But that's not your only option.

@nathangilpin 5 месяцев назад

When they says starting in 2024, does that mean I can use 2023 tax year money to fund the roth being that it is now 2024?

@jaredhoffman213 Год назад

You may want to review the rules for non-qualified 529 distributions before you make videos giving people advice about 529s. The earnings portion of non-qualified distributions is subject to the 10% penalty AND ordinary income tax.

@Financial_Awareness Год назад

@jaredhoffman213 - correct. I’m aware of this. In the video I don’t emphasize both well enough, you’re correct about that. Also, it’s ONLY the EARNINGS subjected to this, not 100% of every withdrawal…as you said. Not many realize that and it does make a difference. From my perspective/opinion, ANY parent can do what they want with this excess money. Getting 100% of your basis back and paying 10% + earned income taxes on the gains …in reality what are we talking about here? A few thousand bucks for the average Joe/Jane? This decision doesn’t matter for 98% of people that won’t have a ton of excess money in a 529. Most people are struggling financially not saving enough for retirement / college. Appreciate you checking out this vid. Thanks!