529 Rollover to Another 529: Everything You Need to Know

Introduction
529 plans are tax-advantaged savings plans designed to help families save for college expenses. One of the key benefits of 529 plans is that they allow for rollovers to other 529 plans. This can be a valuable tool for families who need to make changes to their 529 savings strategy.

Why Rollover a 529 Plan?
There are several reasons why families may choose to roll over a 529 plan to another 529 plan. Some of the most common reasons include:

• Change in beneficiary: If the original beneficiary of the 529 plan decides not to attend college, the account owner can roll over the funds to a new 529 plan for another beneficiary.
• Change in state residency: If the account owner moves to a different state, they may want to roll over the funds to a 529 plan offered by their new state of residence.
• Change in investment strategy: If the account owner is not satisfied with the investment options offered by their current 529 plan, they can roll over the funds to a 529 plan that offers more suitable investment options.

How to Rollover a 529 Plan
Rolling over a 529 plan to another 529 plan is a relatively simple process. The account owner simply needs to contact the new 529 plan provider and request a rollover. The new provider will then send the account owner a rollover form to complete.

Once the rollover form is completed, the account owner will need to send it to the old 529 plan provider. The old provider will then transfer the funds to the new provider.

Tax Consequences of a 529 Rollover
Rollovers from one 529 plan to another are generally tax-free. However, there are a few exceptions to this rule. For example, if the account owner rolls over the funds to a 529 plan that is not offered by their state of residence, they may be subject to state income taxes on the earnings from the rollover.

Benefits of Rolling Over a 529 Plan
There are several benefits to rolling over a 529 plan to another 529 plan. Some of the most notable benefits include:

• Tax savings: Rollovers from one 529 plan to another are generally tax-free. This can save families a significant amount of money in taxes.
• Flexibility: Rollovers allow families to make changes to their 529 savings strategy without having to worry about paying taxes on the earnings.
• Control: Rollovers give families more control over their 529 savings. Families can choose to roll over the funds to a 529 plan that offers more suitable investment options, lower fees, or better customer service.

Common Mistakes to Avoid When Rolling Over a 529 Plan
There are a few common mistakes that families should avoid when rolling over a 529 plan to another 529 plan. Some of the most common mistakes include:

• Not considering the tax consequences: Families should be aware of the tax consequences of rolling over a 529 plan to another 529 plan. In some cases, families may be subject to state income taxes on the earnings from the rollover.
• Not comparing 529 plans: Families should compare 529 plans before rolling over the funds. Families should consider the investment options, fees, and customer service of each plan before making a decision.
• Not completing the rollover form correctly: Families should be sure to complete the rollover form correctly. Incorrect information on the rollover form could delay or even prevent the rollover.

Conclusion
Rolling over a 529 plan to another 529 plan can be a valuable tool for families who need to make changes to their 529 savings strategy. By understanding the benefits, risks, and process of rollovers, families can make informed decisions about whether or not to roll over their 529 plans.

Additional Resources
* IRS Publication 970: Tax Benefits for Education
* Savingforcollege.com: 529 Plan Rollovers
* CollegeBoard.org: 529 Plan Rollovers

Frequently Asked Questions

Q: Can I roll over a 529 plan to any other 529 plan?
A: No, you can only roll over a 529 plan to another 529 plan that is offered by a state or educational institution.

Q: Are there any limits on how many times I can roll over a 529 plan?
A: No, there are no limits on the number of times you can roll over a 529 plan.

Q: How long does it take to roll over a 529 plan?
A: The time it takes to roll over a 529 plan can vary depending on the plan providers involved. However, most rollovers are completed within a few weeks.

Q: What happens if I make a mistake on the rollover form?
A: If you make a mistake on the rollover form, you should contact the new 529 plan provider immediately. The provider will be able to help you correct the mistake.

Tables

Table 1: 529 Plan Contribution Limits

Table 2: 529 Plan Investment Options

Table 3: 529 Plan Fees

Table 4: 529 Plan Tax Benefits