The SECURE 2.0 Act changed 529 plans significantly starting in 2024 — most importantly, allowing unused 529 funds to roll into a Roth IRA. This removed the biggest objection to 529 plans and makes them more attractive than ever for families unsure if their child will attend college.
What 529 plans do
529 plans are tax-advantaged investment accounts for education expenses. Contributions are made with after-tax dollars, grow tax-free, and withdrawals for qualified education expenses are tax-free. No contribution limits at the federal level (gift tax rules apply for large contributions).
The 529-to-Roth rollover: the game-changer from SECURE 2.0
- Starting 2024: unused 529 funds can roll to a Roth IRA for the beneficiary
- Lifetime rollover limit: $35,000 per beneficiary
- Annual rollover limited to the Roth IRA annual contribution limit ($7,000 in 2026)
- 529 must be at least 15 years old
- Rollover does not count against Roth income limits
This means: if your child gets a full scholarship, you can roll $35,000 of the 529 into their Roth IRA — giving them a massive head start on retirement savings.
State tax deductions: the often-missed benefit
| State | Deduction | Notes |
|---|---|---|
| New York | $5,000 single / $10,000 MFJ | Any NY 529 plan |
| Virginia | Unlimited deduction | In-state plan required |
| Illinois | $10,000 / $20,000 MFJ | IL Bright Start only |
| California, Florida, Texas | No state income tax deduction | Still get federal tax-free growth |
🎓 529 college savings calculator
Want to actually apply this?
CashControlly helps you turn this into daily habits. USD-native, no bank connection.
Start 7-day free trial