A 529 plan is a tax-advantaged plan, operated by a state or educational institution, used to save for college and educational expenses. Beginning in 2024, with the SECURE Act 2.0 signed into law, eligible funds from an established 529 account can be transferred tax-free to a Roth IRA for the beneficiary of the 529 account. This may enable you to repurpose any unused education savings toward retirement with no tax penalty. Additional details can be found in IRS publication 590-A.

Before initiating a 529 plan to a Roth IRA rollover, confirm your eligibility with the 529 plan administrator or financial institution. Robinhood makes no determination on the eligibility of any rollover check received. The requirements include the following:

• The rollover must be paid directly from the 529 plan to the Roth IRA.
• The 529 plan must have been opened for 15 or more years before the rollover is initiated.
• The beneficiary of the 529 account and owner of the Roth IRA must be the same person.
• The amount of the rollover is limited:
  • Rollovers are subject to annual Roth IRA contribution limits.
  • Lifetime rollover amounts from all 529 plan accounts may not exceed $35,000.
  • Any contributions made within the 5 years prior to rollover, and any earnings or growth attributable to those contributions, are considered ineligible for rollover.
• The 529 plan beneficiary must have earned income that’s equal to or more than the amount rolled over for the applicable tax year.

Before you begin, confirm if you have a 529 that’s eligible with your 529 plan administrator or financial institution.

1. Before initiating a 529 plan rollover, confirm you have a Roth IRA set up with us. If you don’t, complete the steps in Set up your IRA and select Roth IRA.

2. Contact your 529 plan administrator, confirm what’s required for the rollover, and ask that the check be payable to:

   Robinhood Securities FBO "your name" Roth IRA "your Roth IRA account number"

   And send the check to this secure lockbox address:

   Robinhood Securities, Direct Rollovers, PO Box 772994, Detroit, MI 48277-2994

1. Standard processing:

• You’ll get an email confirmation from us when we receive the 529 plan rollover check.
• After we receive the check, it may take up to 5 business days to process it. Once the check is deposited into your Robinhood account, and funds have settled, we’ll notify you when the money is available to invest.

2. Applicable contribution reporting:

• By default, the rollover will be applied as a Roth IRA contribution for the current tax year.
• However, if the check is clearly marked for the prior tax year and was issued and mailed before the tax filing deadline, Robinhood will apply it to the prior tax year.
• You’ll get a follow-up email that the rollover was applied as a contribution.

3. Excess contributions:

• If the check amount exceeds the allowable Roth IRA contribution limit based on our records (including all IRA contributions with Robinhood), Robinhood will categorize the full check amount as a rollover on IRS Form 5498 and will notify you accordingly. Consult your tax advisor about the potential tax reporting impact for the excess amount.

4. IRA match:

• Robinhood Gold members earn a 3% IRA match after the 529 to Roth IRA check settles, as this is considered an annual contribution.
• If you’re not a Robinhood Gold member, you’ll earn a 1% IRA match.

This is not a recommendation to rollover. You need to consider the pros and cons of this option. Robinhood doesn’t provide tax advice. Consult a tax professional to understand your unique situation. For more information, review this FINRA article.

All investments involve risk and loss of principal is possible. Investors should consider their investment objectives and risks carefully before investing.

Funds being contributed into or distributed from retirement accounts may entail tax consequences. Contributions are limited and withdrawals before age 59 1/2 may be subject to a penalty tax.

Contents provided are for informational purposes only and don't constitute tax or investment advice. Links to third-party sites are being provided for informational purposes only.

The Robinhood Roth IRA is available to any customer with a Robinhood investing account in good standing.