Blair-Sherlock Introduces Plan to Help Families Rollover 529 College Savings Accounts into Roth IRA

SPRINGFIELD, Ill. – Families would be able to more easily rollover money from a 529 College Savings account to a Roth IRA under a proposal introduced by state Rep. Diane Blair-Sherlock, D-Villa Park.

“This option would give parents and their children greater flexibility to decide how to save their money, particularly if they have funds no longer intended for education,” Blair-Sherlock said. “For those looking to help their child get a head start on retirement savings, this would be a helpful change.”

Blair-Sherlocks’ House Bill 5005, which she introduced in partnership with the Illinois Treasurer’s office, would allow rollovers from a 529 College Savings account into the beneficiary’s Roth IRA account without triggering income taxes or penalties. Rollovers would only go to the beneficiary’s Roth IRA, not the parent or guardian. College accounts must be opened at least 15 years before rollover, and up to $35,000 of leftover 529 College Savings funds can be rolled into the Roth IRA.

This update would reflect changes to federal law and expand existing practice in Illinois, which allows rollover from a 529 College Savings account into a qualified tuition program via an Illinois ABLE account.

House Bill 5005 also streamlines documentation rules for parents or guardians to provide proof of residence and birth or adoption.

“Before efforts to enable rollovers to a Roth IRA, families had limited options when it came to unspent money without facing tax consequences,” Blair-Sherlock said. “This measure would be a good path forward that helps families, and I appreciate the advocacy from the Illinois Treasurer on this topic.”

For more information, please contact StateRep46@gmail.com.