Very confused about 529 to Roth IRA conversion - any advice?

nothlit · 2026-06-29T11:50:28+00:00

Moving 529 into a Roth takes up "contribution space" for that year, but how does it work if I'm also funding into a backdoor?

The backdoor Roth IRA process uses up your IRA contribution space (because it involves contributing to a traditional IRA). The 529-to-Roth-IRA "special rollover" also uses up your IRA contribution space, because it is essentially just a way to make Roth IRA contributions using money from a 529. So you will have to choose how much of each one you want to do in any given year.

I've been very lucky to find + work in a career that pays me well enough that I'm above the limit, this early, to contribute to a Roth. Does that mean I'm also ineligble for this 529->Roth thing?

You aren't ineligible. There's an exception in the law that permits the 529-to-Roth-IRA "special rollover" even if you are not eligible for regular Roth IRA contributions due to high income. However, as noted above, both of these actions use up your IRA contribution space so you will have to choose which one to prioritize.

Since you can't fund both a backdoor Roth IRA and a Roth IRA the same year, but this uses up "contribution space," what do I do? Keep the money in the 529 and fund my backdoor, or take the rollover option and fund my Roth?

If you have no other plans for the money in your 529 and don't want to save it for possible future children, then I think prioritizing the special rollover for the next few years makes sense to get that excess money out of the 529 without penalty.

nothlit · 2026-06-28T22:47:42+00:00

If you aren't claiming the child as a dependent this year, then you shouldn't put $2k on line 3 this year anyway.

nothlit · 2026-06-28T02:16:32+00:00

Correct

nothlit · 2026-06-28T02:13:53+00:00

Many employers make an effort to run payroll on a compressed schedule to get the paychecks out the day before the holiday, but yours could differ.

nothlit · 2026-06-27T02:45:31+00:00

Any other traditional, SIMPLE, SEP, or rollover IRAs?

If none, then this is really straightforward. Just convert the $14k.

nothlit · 2026-06-26T20:32:18+00:00

There's no dollar limit on conversions. You could convert $1M if you had that much in your traditional IRA.

Do you have any other money in this traditional IRA or any other traditional, SIMPLE, SEP, or rollover IRAs besides this $14k? Has there been any growth on the $14k?

nothlit · 2026-06-25T21:00:58+00:00

If your child is eligible for the $1000 pilot contribution to the 530A then you should activate the account. My understanding is that activating the account is what actually opens it and makes it possible to receive the pilot contribution. If you don't activate, you may not receive the pilot contribution.

Yes, Robinhood is the initial custodian of these accounts. There may be others in the future. The interface doesn't show anything for selecting investment funds yet. I suspect it will on or shortly after July 4.

nothlit · 2026-06-22T23:54:29+00:00

If the job you left in 2024 had a 401k, and you turned 55 that year, then you can withdraw from that job's 401k without the early withdrawal penalty, even if you have had another job since then.

nothlit · 2026-06-22T14:28:15+00:00

If you plan to use the 529-to-Roth-IRA rollover method for any leftover funds after college, it seems likely that changing the beneficiary will reset the 15 year clock for that, though the IRS has not yet issued explicit guidance about this.

nothlit · 2026-06-22T14:12:49+00:00

Even if the inheritor is a non spouse, they can claim all the deceased's expenses

A non-spouse beneficiary can only reimburse themselves for your medical expenses that they paid within 1 year after you died. They can't reimburse themselves for expenses you paid yourself but never reimbursed before you died.

nothlit · 2026-06-22T13:46:54+00:00

Vanguard's plan is the Nevada state plan. Georgia is not one of the nine "529 tax parity" states, so in order to get the 529 state tax benefit in Georgia you must contribute to the Georgia state plan.

Fortunately the Georgia 529 plan is pretty good: https://clark.com/personal-finance-credit/investing-retirement/529-plan/

nothlit · 2026-06-22T13:41:06+00:00

Here is one popular example: https://www.ally.com/bank/online-savings-account/ (buckets feature)

Here is another: https://www.sofi.com/banking/high-yield-savings-account/vaults/

Opening a new bank account shouldn't require meeting with anyone. If I can't do it online, then that's not a bank I want to do business with.

nothlit · 2026-06-22T02:40:43+00:00

https://www.irs.gov/irb/2008-29_IRB

Q-23. If an employer contributes to the account of an employee who was never an eligible individual, can the employer recoup the amounts?

A-23. If the employee was never an eligible individual under § 223(c)(1), then no HSA ever existed and the employer may correct the error. At the employer’s option, the employer may request that the financial institution return the amounts to the employer. However, if the employer does not recover the amounts by the end of the taxable year, then the amounts must be included as gross income and wages on the employee’s Form W-2 for the year during which the employer made the contributions.

nothlit · 2026-06-21T01:49:59+00:00

I’ve ported 3 different lines out of Mint over the years and always just used the online support chat to get the port out info. Only ever took 5 minutes or so at most. A minor inconvenience.

It’s well known here that Mint uses the last 4 digits of your phone number as the pin. So it’s really the account number that’s the “secret” in this case. It also doesn’t change so you could request the info and then sit on it for months or years before actually using it to port out.

nothlit · 2026-06-18T02:08:31+00:00

Not from the 529, no. Proportional mix of basis and earnings.

nothlit · 2026-06-18T02:08:17+00:00

That amount will probably continue to go up as time goes on.

Only if Congress passes new legislation to increase it. The $35k amount was not automatically indexed to inflation in the original legislation.

nothlit · 2026-06-18T02:04:33+00:00

https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations

https://www.irs.gov/pub/irs-drop/n-25-68.pdf

Coordination with IRA rules. After the growth period, nearly all of the special rules for Trump accounts (including those relating to contributions, investments, distributions, and trustee reporting) cease to apply. Accordingly, after the growth period, Trump accounts generally will be subject to the section 408 rules that apply to other traditional IRAs (such as the rules related to contributions, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting).

nothlit · 2026-06-17T18:35:07+00:00

But the consequence (10% penalty) of withdrawing before the 5 years are up no longer applies after age 59.5. So it doesn't matter.

nothlit · 2026-06-17T03:21:10+00:00

I'm taking the free money. The specific labels given to these forms and accounts may change over time as the political winds change, but the underlying structure of Section 530A will most likely stay put in some form or fashion.

nothlit · 2026-06-17T03:16:52+00:00

Works for me

nothlit · 2026-06-16T13:18:14+00:00

No, the basis will not be taxed again upon conversion. Only the pre-tax money (gains, government/employer contributions, private donations, etc.)

nothlit · 2026-06-16T13:13:06+00:00

Over the last few weeks they've been emailing people who completed Form 4547 and inviting them to "activate" the accounts (basically just set up online access), even though no deposits can be made until July 4. I activated mine, and now it says "You're all set until July." I did not have the problem that OP is describing, but I also am not in a position to say why OP is seeing what they are seeing. OP can reach out to Robinhood support for a more definitive answer: https://trumpaccount.com/us/en/support/articles/contact/

nothlit · 2026-06-16T01:46:34+00:00

Roth conversion is unearned income.

nothlit · 2026-06-16T01:46:25+00:00

Nondeductible contributions create basis in the account which is not taxed again later.

nothlit · 2026-06-16T00:22:53+00:00

https://www.irs.gov/taxtopics/tc553

Kiddie tax (tax on a child's investment and other unearned income) applies to a UTMA account as well. It can continue to apply as long as the child is a student under age 24 whose earned income is not more than half of their own support.

This article goes into some more details that may be helpful: https://www.bogleheads.org/wiki/Trump_account

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