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#26681 - 11/21/04 02:24 PM Can You Convert Roth IRA to 529?
will54 Offline
Junior Member

Registered: 11/21/04
Posts: 1
Is it possible to convert/roll-over a ROTH IRA in my name to a virginia 529 in my daughter's name? If not, do you happen to know the rules on changing the beneficiary name on ROTH IRAs?

Thanks.

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#26682 - 11/21/04 03:54 PM Re: Can You Convert Roth IRA to 529?
529_member Offline
Junior Member

Registered: 11/20/04
Posts: 2
I don't think you can do the conversion/rollover without taking a distribution from the IRA.

Changing beneficiaries (in the event of your death) will be easy. Just ask the custodian/trustee for a copy of their bene change form.

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#26683 - 11/23/04 08:52 PM Re: Can You Convert Roth IRA to 529?
russthomas Offline
Member

Registered: 11/05/04
Posts: 18
Loc: hot springs, ar, garland
You can pull all of your roth contributions out without penalty or taxes for any purpose. So you can pull out all of the principle and invest it into a 529.

If you have earnings they are taxed and penalized when you take them out prematurely.

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#26684 - 11/23/04 10:11 PM Re: Can You Convert Roth IRA to 529?
bwilk Offline
Member

Registered: 05/14/01
Posts: 3345
Loc: AZ
First, this is a horrible idea. Don't raid your retirement for someone else's education.

Next, I don't believe you can change the beneficiary on a Roth unless the original dies.

How old will you be when the intended college student goes to college? If you really feel the need to do this, then if you are over 59 1/2 when the distribution is made there is no tax. Also, why do this before the funds are required? The funds within a Roth grow tax deferred just like a 529 and with fewer fees. You would lose money.

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#26685 - 11/24/04 10:34 AM Re: Can You Convert Roth IRA to 529?
Mike Erpenbach Offline
Member

Registered: 10/22/01
Posts: 565
Loc: St. Paul, MN U.S.
Most of the investment firms I work with do have a change of bene form or will accept a letter of instruction to change the beneficiary on an IRA.

I agree w/bwilk to think about why you have a Roth to begin with. Was the original intent to provide a portion of retirement income? If so, has anything concerning your retirement planning changed to make the Roth unneccessary? (Even if the "math estimate" shows it is unneeded, tax free income later on provides some pretty nice flexibility.)

When college bills arrive, you can use any of the Roth contributions at that time as russthomas suggests. Another option--you can take tax/penalty free withdrawals of those contributions _later_ to help w/student loans and allow a few more years of growth (can't do that w/529).

If financial aid is a consideration the Roth is not included in the FAFSA, the 529 may be to a small extent. If left in the Roth and student loan repayment starts after you are 59 1/2, then you have even greater flexibility to help w/tax free dollars.

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#26686 - 11/25/04 10:45 AM Re: Can You Convert Roth IRA to 529?
bwilk Offline
Member

Registered: 05/14/01
Posts: 3345
Loc: AZ
Mike,

Maybe I read the post wrong, but I thought it meant to change the beneficiary of the Roth while will54 was alive. I know there are beneficiaries listed on IRAs so that there is ownership after death, but I thought will54 meant changing the Roth so that someone else could take distributions while he was still alive.

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#26687 - 11/27/04 04:28 PM Re: Can You Convert Roth IRA to 529?
Mike Erpenbach Offline
Member

Registered: 10/22/01
Posts: 565
Loc: St. Paul, MN U.S.
If that's the case then you're correct, you can't change the person who will recieve the distribution from a Roth IRA as long as the original person is alive. When I read beneficiary I think of the person to recieve the funds after the owner is deceased.

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