529 to Roth IRA rollover in 2026: the 15-year clock, the $35,000 ceiling and your state
Leftover college money can become retirement money for the same child, slowly, and only if the account is old enough.
Can move to the Roth IRA this year
$7,500
At this pace the $35,000 lifetime limit takes 5 years.
| Yearly room (IRA limit, earned income) | $7,500 |
| Lifetime limit left | $35,000 |
| Account open long enough | Yes |
| 2026 IRA limit | $7,500 |
Direct trustee-to-trustee transfer to a Roth IRA of the beneficiary; contributions of the last 5 years and their earnings do not qualify (26 U.S.C. 529(c)(3)(E)).
Worked out by Radif Partners · How we calculate · federal rules from Public Law 119-21 and IRS Publication 970, state rules from each state · not tax advice
Since 2024, a 529 account that has existed for at least 15 years can send money to a Roth IRA owned by its beneficiary without income tax or the 10 % additional tax, under 26 U.S.C. 529(c)(3)(E). Three limits stack. The lifetime ceiling is $35,000 per beneficiary, across all of that person's 529 accounts. The yearly amount cannot pass the Roth IRA contribution limit, $7,500 for 2026, reduced by anything else the beneficiary puts into an IRA that year, and the beneficiary needs earned income at least equal to the amount moved. Contributions made in the last 5 years, with the earnings on them, are excluded. The money must travel as a direct trustee-to-trustee transfer, never as a check to the family. At the full yearly limit, the $35,000 takes 5 years to move. Federal law is settled; state law is not: 7 of the states we have read treat the transfer as a taxable or recaptured withdrawal, and 13 have not said.
Four gates the money passes through
The statute reads like a filter. A distribution escapes tax only for the part that clears every condition at once, and anything that fails one of them is an ordinary withdrawal, with income tax and the 10 % additional tax on its earnings share.
The account's age. The 529 must have been maintained for the beneficiary for the 15-year period ending on the day of the transfer. IRS Publication 970 words it as an account open for more than 15 years. Neither the statute nor Pub. 970 says whether naming a new beneficiary restarts the count, so a family planning to switch the name to a sibling before rolling should ask the plan in writing first.
The age of each dollar. Only contributions made before the 5-year period ending on the transfer date, and the earnings attributable to them, can go. A grandparent's deposit made three years ago stays behind even in a 20-year-old account. Plans track contribution dates, and the statement or a call to the plan tells you how much is old enough.
The yearly cap. The amount moved in a year cannot exceed the Roth IRA limit that applies to the beneficiary, $7,500 in 2026 (IRS IR-2025-111), minus every other contribution made that year to any IRA for that person. Pub. 590-A adds that the beneficiary's taxable compensation also caps a Roth contribution, so a student with a small paycheck moves only that paycheck.
The lifetime cap. All such transfers for one beneficiary, in every year and from every 529, stop at $35,000.
| Condition | Rule in 2026 | Where it is written |
|---|---|---|
| Account age | 15 years or more for this beneficiary | 529(c)(3)(E)(i) |
| Money that qualifies | Contributions older than 5 years and their earnings | 529(c)(3)(E)(i)(I) |
| Way it moves | Direct trustee-to-trustee transfer to the beneficiary’s Roth IRA | 529(c)(3)(E)(i)(II) |
| Yearly amount | $7,500 less other IRA contributions, and no more than earned income | 529(c)(3)(E)(ii)(I); Pub. 590-A |
| Lifetime amount | $35,000 per beneficiary | 529(c)(3)(E)(ii)(II) |
Maya's five-year schedule
Maya is 23, works full time for $28,000 a year and has $41,000 left in the account her parents opened when she was six. $33,000 of it was deposited more than 5 years ago or grew on those deposits. Her yearly room is $7,500, the full IRA limit, because her pay is larger. In the first year $7,500 can move. Assuming the IRA limit stays where it is, the $35,000 ceiling is reached after 5 transfers; if the IRS raises the limit for 2027 or later, the slices grow and the count can shrink.
| Year | Moved to the Roth IRA | Running total |
|---|---|---|
| Year 1 | $7,500 | $7,500 |
| Year 2 | $7,500 | $15,000 |
| Year 3 | $7,500 | $22,500 |
| Year 4 | $7,500 | $30,000 |
| Year 5 | $5,000 | $35,000 |
Something in her plan needs care. Her $33,000 of old money is below the lifetime ceiling, so after a few years she would run short of qualifying dollars unless the remaining balance ages past the 5-year line in the meantime. Money her parents add today becomes eligible 5 years from now, which is why new deposits late in the life of the account do little for this route.
If Maya also opens a Roth IRA at work and puts $2,500 into it herself, her 529 room for that year falls to $5,000. The two compete for one limit; they do not add up.
When earned income is the binding limit
Theo has the same account but only $4,200 of wages from a summer job. His yearly room is $4,200, and at that pace the $35,000 would take 9 years. The rule does not look at who earned the money in the family; it looks at the beneficiary's own compensation, which Pub. 590-A defines as wages, salaries, tips, commissions and self-employment income among others. Pub. 590-A lists interest and dividend income among the items that are not compensation.
Room for a beneficiary with a small paycheck
Can move to the Roth IRA this year
$4,200
| Yearly room (IRA limit, earned income) | $4,200 |
| Lifetime limit left | $35,000 |
| Account open long enough | Yes |
| 2026 IRA limit | $7,500 |
An account that is too young
A family whose 529 is $26,000 strong but only 12 years old gets nothing out of this route yet: the calculator returns $0 and 3 years to wait. The statute and Pub. 970 do not say whether moving the account to another state's plan for the same child keeps the original start date, so ask both plans before a move that could cost you years.
Years left before the account qualifies
Can move to the Roth IRA this year
$0
| Yearly room (IRA limit, earned income) | $7,500 |
| Lifetime limit left | $35,000 |
| Account open long enough | No |
| 2026 IRA limit | $7,500 |
How the transfer is reported
The plan pays the Roth IRA custodian directly. IRS Publication 590-A describes the rollover in its Roth IRA chapter and gives one timing detail: a distribution made after December 31, 2025 and before April 15, 2026, rolled to a Roth IRA by April 15, 2026 and designated for 2025, is reported as a 2025 contribution. For later years, plan on the calendar year of the transfer unless your plan and custodian confirm otherwise.
Your state may not follow
A state income tax starts from federal income and then makes its own adjustments, so the federal exclusion is only the first half. As read on each state's revenue department or plan site:
Treated as a tax-free rollover: Alabama, Arizona, Arkansas, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Montana, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, West Virginia, Wisconsin.
Treated as a non-qualified withdrawal, a recapture event or taxable income: California, Colorado, District of Columbia, Indiana, Maryland, Minnesota, Vermont. In these states, deductions you took on the money can come back as income, and the earnings may be taxed.
No answer found in official state texts: Connecticut, Delaware, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, Oregon, Virginia. The state page shows exactly what was found and on what date.
States without a tax on wages raise no issue here: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. The recapture page explains how a state claws back an old deduction, and the Illinois page is an example of a state that names the Roth transfer as qualified.
Where this route sits among the options
The Roth transfer is a slow exit. For a large leftover balance, a change of beneficiary to a sibling, a niece or a parent of the beneficiary keeps every dollar tax-free for school and moves it in one step. A child who works while still a minor can also fund a Roth IRA directly from wages, which uses the same yearly room; the custodial Roth IRA page works through that case.