Save for your kid’s college: Here’s an upcoming option for those of you who may have 529 plan with leftover funds in them or are afraid to fund an account for fear that you’ll have too much in a 529. The Secure Act 2.0 has been passed and it includes some new regulations that will be helpful starting in 2024 for those of you who have a 529 plan with money in it and no education to pay for.
You will be able to roll those funds over into a Roth IRA, that seems like a great idea. Without this, to empty out the 529, you have to take a distribution and pay taxes on the earnings in that account.
So this will help make sure that you don’t have to pay taxes on the earning of the account and you don’t have to fear that you’re overfunding a 529.
After all if your child gets scholarships or does go to college, you don’t want to be stuck with this fund and have to pay all of the tax on the earnings when you could have done something else with it to defer that payment.
So under this law, investors can roll up to $35,000 from a 529 into their Roth starting in 2024. I’ll include a link to an article about this with more details, but you’ll have a little bit of time to set this up.
So make sure you talk to your financial advisor about how you will do that and get that Roth IRA set up and funding. And by all means, if you’re in a state that allows you a state tax deduction for 529 contributions, make sure you take advantage of that and that will also help you move that money into the Roth.
For additional read: Meet the Uncle Sam Strategy
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Donna Bordeaux, CPA with Calculated Moves
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.