By Andy Ives, CFP®, AIF®
IRA Analyst
QUESTION:
Our client has funds left over in her 529 plan. She is not working. Can she roll over the 529 dollars to a Roth IRA? Does she need earned income? Can you do it as a spousal Roth contribution?
Thanks,
Mary
ANSWER:
Mary,
Unused 529 funds can only be rolled over to a Roth IRA if the beneficiary has compensation in the year of the rollover at least up to the amount of the rollover. Also, a rollover must be in the name of the 529 beneficiary (so no rollovers to a spouse). There are a number of other rules to follow, including: the 529 must have been open for at least 15 years; there is a lifetime 529-to-Roth rollover cap of $35,000; and only up to the annual Roth IRA contribution amount can be rolled over in any year.
QUESTION:
What kind of investments will be allowed in the Trump accounts for kids?
Joey
ANSWER:
Joey,
An eligible investment for a Trump account is a low-cost mutual fund or exchange-traded fund (ETF) that tracks the S&P 500 index or any other “qualified index” comprised of stocks in primarily U.S. companies, and that does not use leverage. A mutual fund or ETF will be considered “low-cost” if its expense ratio is less than 0.1%. A “qualified index” does not include any industry or sector-specific index, but may include an index based on market capitalization. An index will be treated as comprised of “primarily” U.S. companies if those companies represent at least 90 percent of the index based on their weighting in the index.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/529-plan-rollovers-and-investments-in-trump-accounts-todays-slott-report-mailbag/