529 Roth IRA rollover process

[agalkin]

How does 529 to Roth IRA rollover work? Can I just withdraw $7k from my 529 for next 5 years until $35k lifetime limit is reached and then contribute to my kid's who is 529 beneficiary Roth IRA account? Or money must be sent directly somehow from 529 to Roth IRA account?

[dcandmc]

My limited familiarity with the process, with just one 529 plan, is that a dedicated form provided by the plan administrator is completed and sent to the plan administrator and a trustee-to-trustee transfer is then done through a paper check mailed from the 529 plan to the administrator of the 529 beneficiary's Roth IRA account. Bottom line: you will need to check with your 529 plan administrator and ask how they want this to be done.

[agalkin]

Where did you find this guidance? My 529 plan sent me the notice that IRA has not issued any guidance on rollover and the account owner is responsible with compliance with Secure 2.0 act and paying any taxes or penalties.

[dcandmc]

It's not guidance from the IRS; it's just the way that this particular 529 plan has elected to process requests from account owners to do 529 to Roth IRA rollovers. That's why I wrote that you should check with your own 529 plan administrator. If they haven't implemented any kind of internal process and are telling account owners that you are on your own, then I guess you will just have to ask for a distribution of not more than $7,000 and once received turn around and deposit an equal amount into a Roth IRA account owned by the 529 beneficiary. Just make sure you keep all the documentation necessary to clearly show the IRS what you did, in case they come knocking later on.

[velaga]

I went through this process recently. I filled and signed the form that my 529 plan (college savings Iowa) admin gave me, mailed it back to them and they did a trustee to trustee transfer of $7,000 to the Roth IRA of my son who is the beneficiary on that 529 plan.