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August 6, 2024 – Parents who don’t use all the money in their Illinois 529 College Savings Accounts (Bright Start and Bright Directions) are now able to roll over the funds into a Roth IRA under Illinois Treasurer Michael Frerichs’ plan that was signed into law.
The federal law set some limitations on college savings rollovers, including a $35,000 lifetime limit on transfers, which also are subject to annual Roth IRA contribution limits (this year they are $7,000 for people under 50). In addition, rollovers must be made to the college savings account beneficiary and not the owner. And rollovers only can be made from 529 accounts that have been active for 15 years and no contributions or investment earnings in the last five years are eligible for rollover.