Rollover from Section 529 Plan to Roth IRA Allowed—SECURE 2.0 Act. Beginning in 2024, amounts held in a 529 plan (qualified tuition program) of a designated beneficiary at least 15 years may be rolled over to a Roth IRA of the same beneficiary and excluded from gross income. The distribution cannot exceed the aggregate amount contributed to the 529 account (including earnings) made in the previous five years. Also, there is an aggregate lifetime limit of $35,000 on such rollover distributions with respect to the designated beneficiary. The rollover distribution counts toward the annual Roth IRA contribution limit ($7,000 for an individual under age 50 in 2024) (Code Sec. 529, as amended by the SECURE 2.0 Act of 2022 (P.L. 117-328)).

Unlike a traditional IRA, a taxpayer cannot deduct contributions to a Roth IRA and qualified distributions from a Roth IRA are tax free. The active participation limits do not apply to Roth IRAs, but there is a contribution limit and an income based limitation. Contributions to Roth IRAs are not reported on income tax returns.