Perspective Matters

KEY TAKEWAYS

If you’ve been following the news about the 529-to-Roth IRA rollover — a rule that was signed into law over three years ago — you may be frustrated that we still don’t have answers to some basic questions. You’re not imagining things. That frustration is well-founded, and it reflects something important about how financial legislation works right now.

It wasn’t always this way. For most of our history, Congress would pass a law describing its intent, and then the relevant agencies — the IRS, the Department of Labor — would develop the rules and processes needed to implement it. Those rules were published as drafts, with time for review and public comment. That process existed for good reason: ambiguities in legislation can produce outcomes nobody intended, and that review period was the opportunity to catch and correct them before anything went into effect.

A well-known example involves the Pension Protection Act of 2006. That law created the Stretch IRA — allowing non-spouse beneficiaries to take distributions over their own lifetimes rather than being forced to empty an account immediately. When the IRS published its first implementation notice, it used the word “may” instead of “shall.” One small word, and the entire intent of the law was at risk. Because the PPA had a four-year phase-in, there was time to catch the error and fix it before anyone was affected.

Somewhere in the last decade or so, that discipline has eroded. Laws affecting your retirement accounts are now routinely passed and made effective immediately — before the agencies responsible for implementing them have had time to write the rules. The result is confusion, contradictory guidance, and decisions that can’t be made with confidence.

This month’s article, by IRA analyst Andy Ives, CFP®, is a clear example: a provision of the SECURE 2.0 Act that could benefit many families — moving 529 college savings dollars into a Roth IRA — has been sitting in limbo for three and a half years because a critical question still has no official answer.

529-TO-ROTH: STILL NO NEWS ON 15-YEAR CLOCK

Wednesday, May 27, 2026

By Andy Ives, CFP®, AIF®  |  IRA Analyst

It’s been nearly 3½ years, and still no news. No guidance. No updates.

Background: In December 2022, the SECURE 2.0 Act was signed into law. That legislation contained an extensively discussed provision – allowing excess dollars in a 529 college savings plan to be rolled over to a Roth IRA. However, that provision included a number of significant restrictions. For example:

• The maximum lifetime amount that can be rolled over is $35,000.

• Rollovers are subject to the annual Roth IRA contribution limit. So, for example, since the Roth IRA contribution limit in 2026 is $7,500, then no more than $7,500 can be rolled over from a 529 to a Roth IRA in 2026. Consequently, a full $35,000 529-to-Roth IRA rollover would need to be done over several years.

• The 529 beneficiary doing the rollover must have compensation in the year of the rollover at least equal to the amount being rolled over.

• The Roth IRA must be in the name of the 529 beneficiary – not the 529 owner (if different).

  
  

And here’s the big sticking point:

• The 529 plan must have been open for at least 15 years.

  
  

That rule in and of itself is not too high of a hurdle. The problem is that, here we are 3½ years later, and we still do not know if changing the beneficiary of the 529 account resets the 15-year clock. Will the existing time period applicable to the initial account opening carry over to the new beneficiary? No one on the planet has that information. Accordingly, advisors and custodians alike have been advising clients to leave the 529 beneficiary as-is until confirmation is received as to how the 15 years will be applied. Jumping the gun could result in a decade-and-a-half additional wait time to roll over excess 529 dollars to a Roth IRA.

In the meantime, while we all anxiously refresh our computers every few minutes to see if the IRS has released any 529 beneficiary change updates (sarcasm), it’s important to recognize additional 529-to-Roth rules we know are in effect:

• Rollover amounts cannot include any 529 contributions (or earnings on those contributions) made in the preceding five-year period.

• Any actual Roth IRA (or traditional IRA) contributions made by the 529 beneficiary will count against the permitted annual rollover amount.

• There are no income limits restricting the 529-to-Roth IRA rollover for either the beneficiary or 529 owner.

• The rollover from the 529 plan to the Roth IRA is a nontaxable transaction.

Copyright © 2026, Ed Slott and Company, LLC Reprinted from The Slott Report, April 29, 2026, with permission. https://irahelp.com/529-to-roth-still-no-news-on-15-year-clock/ Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

The “new normal” Andy describes isn’t going away. Laws are being passed with compelling headlines and incomplete details, and the gap between what’s been signed and what’s been clarified can stretch for years. In that environment, the cost of a misstep isn’t just financial — some mistakes with retirement accounts are irreversible.

This is exactly where having the right guidance matters most. As a Certified Financial Planner® and a member of Ed Slott’s Master Elite IRA Advisor Group™, I specialize in the intersection of tax law and retirement accounts — precisely the area where this kind of ambiguity creates the most risk. At Prism Planning and Solutions Group, our goal is to make sure you’re never making important decisions in the dark. We can help you understand what the current rules actually require, what’s still unsettled, and how to protect yourself in the meantime.

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Prism Planning & Solutions Group is a dba of PPSGRP, an SEC Registered Investment Adviser. This material is solely for informational purposes. Past performance is no guarantee of future results. Investing involves risk and possible loss of principal capital. No advice may be rendered by PPSGRP unless a client service agreement is in place. The views reflected in this article are subject to change at any time without notice.  

Neither Prism Planning and Solutions Group nor PPSGRP provides tax or legal advice, and nothing in this communication should be treated as such. This communication should not be interpreted as a recommendation for a specific investment, legal or tax-planning strategy. This third-party content is provided for informational purposes only. We have not independently verified all information and it may not reflect the most current regulatory guidance. This article discusses general tax and legal considerations and should not be relied upon as legal or tax advice. Before making any decisions related to your own tax, legal and/or investment situation you should consult the appropriate professionals.  

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.   

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