Footnotes

1 The TIAA group of companies and Oklahoma 529 do not provide legal or tax advice. Please consult your tax or legal advisor to address your specific circumstances. ↩

Account owners may roll money from an Oklahoma 529 account to a Roth IRA for the benefit of the 529 plan account beneficiary without incurring federal income tax or penalties (state tax treatment varies). Rollovers from a 529 plan account to a Roth IRA that do not incur federal income tax should also be free from Oklahoma state income tax.

For the rollover to be treated as a non-taxable event, the following conditions apply:

The 529 plan account must be open for 15 or more years, ending with the date of the rollover;

Contributions and associated earnings that you transfer to the Roth IRA must be in the 529 plan account for more than five (5) years, ending with the date of the rollover;

The Internal Revenue Code permits a lifetime maximum amount of $35,000 per designated beneficiary to be rolled over from 529 plan accounts to Roth IRAs;

529 plan assets can only be rolled over into a Roth IRA maintained for the benefit of the designated beneficiary on the 529 plan account;

529 plan assets must be sent directly to the Roth IRA;

Roth IRA income limitations are waived for 529 plan rollovers to Roth IRAs; and

The Roth IRA contribution is subject to the Roth IRA contribution limit for the taxable year applicable to the designated beneficiary for all individual retirement plans maintained for the benefit of the designated beneficiary.

Funds rolled over to a Roth IRA can be withdrawn free from federal and Oklahoma income tax. If you are not an Oklahoma taxpayer, these withdrawals may include recapture of tax deduction and state income tax. Account Owners and Beneficiaries should consult with a qualified tax professional before rolling over funds from their 529 plan to contribute to a Roth IRA.