We set up a 529 when our son was born. He decided to drop out of HS and get his GED, now 25. We left the 529 there in case he decided to go for further education, but that doesn't seem likely. Looks like rate of growth was about 9.5%, sitting around 35k. He is aware there is a fund, but the last time we took some out for a class he took it was only around $22k.
Would appreciate opinions on what direction to go – would rolling into a Roth IRA be the smartest move? just leave it be?
Posted by Kairiste
3 Comments
Either roll it into a Roth IRA (will take a couple of years) or change the beneficiary. Or both.
Is he going back to school?
If not you can start rolling it into Roth IRA. Will take 5 years empty it
The Roth rollover route is solid — account’s old enough to qualify (needs 15 years of seasoning, which you’ve cleared by a mile) and $35k is basically right at the lifetime transfer limit. One wrinkle nobody mentioned: the rollover counts as a Roth contribution for the BENEFICIARY, meaning your son needs earned income each year to accept it. if his income is inconsistent, that could limit your annual rollover even before you hit the $7k cap.
Also worth knowing you can change the beneficiary to another family member — younger sibling, eventual grandkid, yourself — without taxes or penalties, if that route gets complicated.