The 529-to-Roth Playbook: How Leftover Education Funds Can Fuel Retirement
May 29, 2026
For some families, graduations bring a new question into focus: what to do with leftover funds in a 529 account.
It’s more common than you might think to have money left over in a 529 plan. Maybe your child earned a scholarship, took an alternative educational path, or you simply saved more than was needed. In the past, using that money for anything other than education costs meant paying taxes and a penalty on the growth. Now, thanks to a recent rule change under the Secure Act 2.0, there’s a new option for these leftover funds.
Secure 2.0 introduced the opportunity to rollover 529 funds tax-free to a Roth IRA for the same beneficiary. This strategy offers a meaningful way to repurpose leftover education funds toward retirement savings.
There are a few important parameters to keep in mind:
- The 529 must have been open for at least 15 years.
- The beneficiary must have earned income to match the rollover amount.
- Annual rollovers are capped at the annual Roth IRA contribution limit ($7,500 for 2026).
- The maximum lifetime rollover is $35,000 per beneficiary.
While this may seem modest at first glance, the long-term potential is powerful. For a young adult starting with $35,000 in a Roth IRA, compounding growth over several decades could translate to a nest egg of $500,000 or more, without any additional contributions.
If you’re wondering whether this strategy could be good for your family and your long-term plan, we’re always here to talk it through.
By,
Kate Feeney
Vice President, Senior Wealth Advisor
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