1. Student loan repayments
The Setting Every Community Up for Retirement Enhancement Act (SECURE 1.0) in 2019 expanded the definition of qualified education expenses to include the principal and/or interest on the repayment of qualified education loans of the beneficiary and/or their siblings. This distribution has a lifetime limit of $10,000 per borrower. Qualified education loans include all federal and most private loans.
2. Distribution to Roth IRA
Have leftover funds in a 529 savings plan? Beginning in 2024, you may be able to transfer certain unused assets — tax-free — from a 529 plan to a Roth IRA via a direct trustee-to-trustee transfer. This would give the beneficiary an early start on tax-advantaged long-term savings.
This transfer has the potential to allow beneficiaries to reap the benefits of both a 529 savings plan and a Roth IRA — and high-income beneficiaries may be able to contribute to a Roth IRA without being subject to AGI limits.2
3. Employer match
Some employers who may be looking to differentiate themselves with enhanced benefits are adding a 529 savings plan to their platform. These benefits can include an employer match on contributions to a 529 savings plan — and you could be leaving money on the table if you’re not taking full advantage.
