[Isabelle]

Curious about people’s thoughts on how best to use an old 529 plan!
For context, my parents had 529 plans for both myself and my sibling, and we have both now graduated college with no plans for further education.

I know an option is to roll them into IRA’s – My sibling and I’s employers each match 401k contributions to 6% of our salaries, and I already contribute the max to my 401k and Roth yearly.

We both haven’t given any thought to future children at this time, would it make the most sense to just transfer the beneficiaries to myself and my sibling and just hang onto the money?

Could it be used (I understand there’s a penalty for non-educational related withdrawals) later in life as a bridge between early retirement (my target is 50 years old) and being able to access my 401k money, since I’d have a lower effective tax rate at that time also?

Curious if I’m missing something or if anyone else has done something creative with extra 529 $$!

[Wendi]

Is there any chance your parents may need the funds for their own retirement? Some parents fund their kid’s college to the detriment of their owns savings.

If so, it may be worth them taking the penalty as it’s only on earnings, not contributions.

[Eli]

If it were me, I’d do the max 35k rollover to Roth and if there were anything left, just hang tight in case children come into plan in the future and then transfer to them.

[Joan]

Use that money to fund your Roth and put the same amount into your brokerage account that you would have used otherwise.

[Jex]

Your contributions to your employer’s 401(k) has no impact on your Roth IRA. You can continue contributing to the 401(k) AND rollover $7K this year your Roth IRA.

You can also use the 529 for a master’s degree or higher, if that’s something you decide to do someday.

Your parents could also save them and change the beneficiary to any future children you or your sibling, if that’s in your life plans.

Withdrawing and paying the taxes and penalties is an option, but usually a low priority option due to the inefficiency.

I’m also not entirely sure on who pays the taxes on the earnings- since your parents are the account owners, they might pay the taxes.

I believe it is possible to change the account owner, if they’re not willing to pay the taxes upon withdrawal.

[Kevin]

Isn’t it pretty limited as to how much you can roll over into an IRA?

[Author]

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