Proposal Eliminating Cap on Rollover Amounts From 529 Plans to Roth IRAs Introduced

Senator Ted Cruz (R-TX), along with cosponsor Senator Lisa Blunt Rochester (D-DE), have introduced S. 5550, to eliminate the aggregate limitation on rollovers from a 529 program to a Roth IRA. The legislation was referred to the Senate Committee on Finance for further consideration.

Under SECURE 2.0, effective beginning in 2024, certain assets in 529 higher education savings plans could be rolled over to Roth IRAs. To be eligible, the account must have been in existence for at least 15 years, and the amount to be rolled over must have been in the account for five years. Only an amount up to the annual IRA contribution limit ($7,500 for 2026) may be rolled over in any one year. The aggregate amount rolled over is currently subject to a lifetime limit of $35,000.