Another 529 PLAN Question

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  • Brian EA
    Senior Member
    • Dec 2005
    • 786
    #1

    Another 529 PLAN Question

    Dependent student graduated in 2023 with over 60K in excess 529 Plan Funds.
    She got married in 2024 and her parents used 30K for the wedding.
    Earnings of 16K reported on Parents return with the 10% penalty. Dad social security number on 1099Q.
    Parents also Funded a Roth IRA for their daughter for 2024 - 7K and plan to continue doing it for the next 5 years until the funds are all used up.
    The dependent social security number is on the 1099Q for the withdrawal for the IRA.
    Is there a penalty for this withdrawal?
    Thanks
    Brian
    Everybody should pay his income tax with a smile. I tried it, but they wanted cash
    Tags: None
    • New York Enrolled Agent
      Senior Member
      • Nov 2006
      • 1533
      #2
      You don't say explicitly - the $7K funding of the Roth. Was it a trustee-to-trustee move into the Roth? Or the parents took a $7K withdrawal and then funded the Roth? Makes a difference.

        Comment

        • Brian EA
          Senior Member
          • Dec 2005
          • 786
          #3
          It was Trustee to Trustee.
          Thanks
          Everybody should pay his income tax with a smile. I tried it, but they wanted cash

            Comment

            • Lion
              Senior Member
              • Jun 2005
              • 4699
              #4
              A retirement savings head start: 529-to-Roth rollovers
              https://www.thetaxadviser.com/content/tta-home/issues/2024/jul/a-retirement-savings-head-start-529-to-roth-rollovers.html/
              The recently enacted ability to transfer $35,000 of funds from a Sec. 529 plan to a Roth IRA can not only rescue funds “trapped” as education funding once they are no longer needed but can also provide a generous head start on beneficiaries’ assets for retirement.


                Comment

                • Brian EA
                  Senior Member
                  • Dec 2005
                  • 786
                  #5
                  Originally posted by Lion
                  https://www.thetaxadviser.com/conten...ollovers.html/
                  Thank You, Sir.
                  Everybody should pay his income tax with a smile. I tried it, but they wanted cash

                    Comment

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