You now have even more options on how to use the remaining funds in your CollegeAdvantage Guaranteed 529 Savings Plan account.
Please keep in mind that your Guaranteed Savings Plan funds must be used or withdrawn from the account prior to the beneficiary turning the age of 28. If your beneficiary has remaining funds in their account or isn’t planning to utilize the funds for qualified higher educational expenses, you have the following options.
The IRS allows individuals to roll over funds to another 529 plan. After doing so, you would have the ability to transfer those funds to a different beneficiary once the rollover has been completed. You now have the option to help your beneficiary start saving for their retirement as you can now roll over any remaining Guaranteed Savings Plan funds into a Roth IRA.
As a reminder, the 2023-2024 WAT payout rates for the CollegeAdvantage Guaranteed 529 Savings Plan was released July 28, 2023. They are:
Tuition Unit: $123.88
Tuition Credit: $142.46
The 2024-2025 WAT payout rates for the CollegeAdvantage Guaranteed 529 Savings Plan will be released later this summer.
Rollover to an existing CollegeAdvantage Direct or Advisor 529 Plan account
If you have an existing CollegeAdvantage Direct 529 Savings Plan account and wish to roll over the funds in your Guaranteed Plan account to one or more of the 22 investment options offered in the CollegeAdvantage Direct Plan, you may do so by completing the Guaranteed Withdrawal Form.
Under Step 4 “Reason for withdrawal” on the form, you will need to check the box indicating “rollover assets from my existing CollegeAdvantage Guaranteed 529 account to the CollegeAdvantage Direct 529 Plan or CollegeAdvantage Advisor 529 Plan,” and include your 11-digit Direct Plan account number where it is requested.
If you already have an existing CollegeAdvantage Advisor account, you can also roll over the Guaranteed funds in this account. Please follow the instructions on the Guaranteed Withdrawal Form, and at Step 4, select the box stating, “rollover assets from my existing CollegeAdvantage Guaranteed 529 account to the CollegeAdvantage Direct 529 Plan or CollegeAdvantage Advisor 529 Plan.” You will need your CollegeAdvantage Advisor account number to process this request.
Rollover and need to open CollegeAdvantage Direct 529 Plan account
If you do not have an existing CollegeAdvantage Direct 529 Savings Plan account and wish to roll over the funds in your Guaranteed Plan account to one or more of the 22 investment options offered in the CollegeAdvantage Direct Plan, you will need to first setup a Direct 529 Plan account. The investment options in the Direct Plan include market-based mutual fund investment options, which are not guaranteed by the State of Ohio and offer the potential risks and rewards of the investments marketplace. We also offer Fifth Third bank options, which are FDIC insured to certain limits.
Before enrolling, please read the CollegeAdvantage Direct 529 Plan Offering Statement and Participation Agreement, which is available at the top of our website at CollegeAdvantage.com.
To open a CollegeAdvantage Direct Plan account, visit our website and click on the link that says, “Open an Account.” The online system will walk you through the steps of opening a Direct Plan account. If you would like additional guidance, this article will also take you step-by-step through the online process. Once you have completed the process, please be sure you write down your new Direct Plan 11-digit account number as you will need this to complete the rollover.
If you prefer, you can open an account by mailing a completed Account Application Form, which can also be found at the top of our website, under the word “Forms.” Simply complete this form and mail it to the address on the form. Once the account has been established, you will receive confirmation in the mail with your 11-digit account number. You will need the account number for the rollover.
Finally, whether you opened an account online or by mail, the last step is to complete the Guaranteed Withdrawal Form. You will need to check the box indicating “rollover assets from my existing CollegeAdvantage Guaranteed 529 Account to the CollegeAdvantage Direct 529 Plan,” and include your 11-digit Direct Plan account number where it is requested.
Rollover to a Roth IRA in the same Beneficiary’s Name
The SECURE 2.0 Act of 2022 (the “SECURE 2.0 Act”) was signed into federal law in December 2022. In addition to a number of significant retirement savings related enhancements, the SECURE 2.0 Act revises Section 529 of the Internal Revenue Code (“IRC”). As of January 1, 2024, tax-free and penalty-free rollovers are permitted from a 529 plan account to a Roth IRA, subject to the certain conditions (“529-to-Roth Rollovers”).
The conditions include, but are not limited to, the following:
- The 529 plan account must have been maintained for the 15-year period ending on the date of the 529-to-Roth Rollover.
- The amount of the 529-to-Roth IRA Rollover may not exceed the aggregate amount contributed to the 529 program account (and earnings attributable thereto) before the 5-year period ending on the date of such rollover.
- The aggregate amount of 529-to-Roth IRA Rollovers for the same designated beneficiary may not exceed $35,000.
- The 529-to-Roth IRA Rollover must be made in a direct trustee-to-trustee transfer to a Roth IRA maintained for the benefit of the same designated beneficiary of the 529 program account (not the account owner – if different).
- Each year, the 529-to-Roth IRA Rollover will be subject to annual IRA contribution limits, minus all other IRA contributions made during the year for the same designated beneficiary. In addition, such rollovers may not exceed the amount of compensation the designated beneficiary earned during the year.
- Roth IRA income limitations are waived for 529 plan rollovers to Roth IRAs.
The above information regarding 529-to-Roth Rollovers is based on a good faith interpretation of the newly enacted federal legislation. The IRS may issue additional guidance that may impact 529 plan account rollovers to Roth IRAs, including the above referenced conditions. In that event, we will share the latest information.
Account Owners and Beneficiaries should each consult a financial professional or tax advisor regarding the applicability of these rollovers to their personal situations. You are responsible for determining the eligibility of a 529 plan to Roth IRA rollover, including tracking and documenting the length of time the 529 plan account has been opened, and the amount of assets in your 529 plan account eligible to be rolled into a Roth IRA. To request a rollover to a Roth IRA, please submit the appropriate form to the CollegeAdvantage Guaranteed 529 Plan. The provision is effective with respect to 529-to-Roth Rollovers made after December 31, 2023.
The Guaranteed Savings Plan Roth IRA Rollover Form can be found on our website by clicking on the link at the top of the page that says “Forms.” Please be sure to choose the Guaranteed Plan Roth IRA Rollover Form, which can be found on the lower half of the page.
If you should have any further questions relating to this matter, please feel free to contact our Customer Service group directly at 1-800-AFFORD-IT (233-6734), 8:30 a.m. – 6 p.m. EDT Monday through Friday, or via email at customerservice@collegeadvantage.com.
Since 1989, Ohio’s 529 Plan has been helping families across the nation save for their children’s higher education with many tax benefits. Ohio’s 529 Plan covers qualified expenses at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate programs, or continuing education classes nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at CollegeAdvantage.
