Last month, a bill was introduced in Congress that would make some great changes to 529 plans. One of the best is this: it would allow account holders to roll up to $25,000 in leftover 529 plan funds into a Roth IRA with no taxes or penalty. There are some conditions, such as that the account must have been open for 10 years, but overall this could be a great deal for parents unsure of how best to save for both college and retirement– with most of us meeting that definition!
The bill, HR 4333, is co-sponsored by U.S. Reps. Lynn Jenkins, R-Kan., and Ron Kind, D-Wis. It includes various other provisions including allowing more frequent account rebalancing (4 times per year versus the current once) and adding computers to the list of qualified expenses whether or not your school requires one.
Here are more details.