Your kid got a scholarship. Or skipped grad school. Or the market was kind and there's $20,000 sitting in a 529 with no tuition left to pay. For decades the options were all awkward: pass it to a sibling, park it for a hypothetical grandchild, or cash out and hand the IRS a cut of the earnings. Starting in 2024, SECURE 2.0 added a fourth door: roll up to $35,000 straight into the beneficiary's Roth IRA, tax and penalty free. It's the best fix the 529 "trapped money" problem has ever had, and the rules are strict enough that the sequence matters.
Two side rules deserve their own line. The beneficiary needs earned income at least equal to the rollover: a part-time job paying $8,000 easily covers that year's $7,500 transfer, but a $4,000 summer caps the rollover at $4,000. And there is no income phase-out: unlike regular Roth contributions, a beneficiary earning $300,000 can still roll. That combination is unusual enough that advisors call this the stealth Roth door.
Because of the annual limit, $35,000 can't move in one shot. At 2026's $7,500 limit it takes five years: four at $7,500 and a fifth at $5,000. The schedule below assumes a $42,000 balance, an account opened in 2009, a 22-year-old beneficiary earning $30,000, and no competing Roth contributions.
| Year | Rollover | $35k cap remaining | 529 left |
|---|---|---|---|
| 2026 | $7,500 | $27,500 | $34,500 |
| 2027 | $7,500 | $20,000 | $27,000 |
| 2028 | $7,500 | $12,500 | $19,500 |
| 2029 | $7,500 | $5,000 | $12,000 |
| 2030 | $5,000 | $0 | $7,000 |
Five years, $35,000 converted, and $7,000 still stuck in the 529. That residue isn't wasted: it stays available for grad school, up to $10,000 of student loan payoff, or a future grandchild. A smaller balance finishes sooner. A $12,000 leftover drains in two years ($7,500 then $4,500) and leaves nothing behind.
Balance, open date, age, and income in; eligibility checks and the year-by-year drain plan out.
Open the 529 to Roth Rollover Calculator →The 15-year rule quietly punishes procrastinators. An account opened the year a child is born turns 15 when she starts tenth grade, in time for freshman-year rollovers if college isn't the path. An account opened when she's ten isn't eligible until she's 25. Since contributions within five years of a rollover are excluded, the practical pattern is: fund early, stop contributing at least five years before the first rollover, then drain on the annual-limit schedule.
One trap worth flagging: changing the beneficiary restarts the 15-year clock. Redirecting a stale account from an older child to a younger one feels free, but it can push rollover eligibility out a decade and a half. If a rollover is on the table at all, run the dates before you retitle anything.
Mostly. Once inside the Roth, rollover dollars follow contribution ordering: basis comes out first, tax-free, at any age; earnings wait for age 59 and a half and the five-year rule. The rollover itself isn't income, doesn't show up on the tax return as a taxable event, and doesn't trigger estimated tax the way a traditional-to-Roth conversion does. That's the whole appeal, it's the only "conversion" in the retirement universe that moves earnings without a tax bill.
For contrast, a regular Roth conversion taxes every pre-tax dollar in the year it moves. If you're weighing that route for other money, the Roth conversion calculator runs the bracket-ladder math. And once the 529 is drained, the compounding question takes over: the compound interest calculator shows what 35 years of tax-free growth on $35,000 looks like.
A rollover is the exit for genuinely leftover money, not a substitute for paying qualified expenses. Before you schedule anything, check what the account can still cover: tuition anywhere in the family, room and board within the school's allowance, $10,000 lifetime of student loans per borrower, and the new post-July 2025 credentialing expenses. The 529 qualified expense checker sorts a real spending list into covered and not covered, which is the honest way to know how much is actually "leftover."
$35,000 lifetime per beneficiary, moved in annual pieces no larger than that year's IRA contribution limit ($7,500 in 2026). Across all 529 accounts for that beneficiary, not per account.
No. The money must land in a Roth IRA owned by the 529 beneficiary, the child. Rolling into the parent's Roth isn't allowed. If you want the child's money to end up with you, the honest route is a non-qualified withdrawal, which taxes and penalizes the earnings.
Changing the beneficiary restarts the 15-year clock for the new beneficiary. Since rollovers require the account to have been open 15 years with the same beneficiary, last-minute beneficiary swaps can delay eligibility. Plan any change well before you intend to start rolling.
No. When the rules are followed, both the contribution basis and the earnings move without tax or the 10% penalty. Inside the Roth, the money follows normal Roth ordering rules: contributions first, earnings tax-free after age 59 and a half and the five-year clock.