Inquiry on September 12: Inquiries Regarding the Tax Implications of Rolling Over 529 Plans into a Roth IRA
In the world of finance, understanding the intricacies of tax laws can be a daunting task. But fear not, for help is at hand! Joy Taylor, an expert in tax matters, is ready to answer your questions on a range of topics, including Qualified Charitable Distributions (QCDs), Roth IRA conversions, 529 plans, Inherited IRAs, IRAs, Required Minimum Distributions (RMDs), and Pension Transfer Payments (PTPs).
To get your questions answered, you can submit them to Joy Taylor for future Ask the Editor round-ups. The Kiplinger Tax Letter, The Kiplinger Letter, and The Kiplinger Retirement Report are publications where you can find details on how to do this.
Now, let's clear up some common misconceptions about 529 plans and Roth IRAs. Contrary to some beliefs, if an individual is the beneficiary of two 529 accounts, the lifetime cap on direct trustee-to-trustee transfers to a Roth IRA is $35,000, not $70,000. It's also important to note that this limit applies per person, not per account. Furthermore, it's currently not possible to make a direct rollover from a 529 plan to a Roth IRA.
However, if a transfer from a 529 plan to a Roth IRA does occur, it must meet all Roth IRA rules. One such rule is that the beneficiary must have taxable compensation equal to or greater than the 529 amount transferred. If the beneficiary does not have taxable compensation for the year, they cannot transfer funds to a Roth IRA.
The answers provided by Joy Taylor are for general informational purposes only and do not constitute independent financial, legal, or tax advice. For personalized advice, it's always best to consult with a qualified professional.
So, if you have a tax-related question that's been puzzling you, don't hesitate to submit it to Joy Taylor. With her expertise and the wealth of knowledge at Kiplinger, you'll soon have the answers you need to make informed decisions about your financial future.
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