10/22/2026
“My parents saved in a 529, but my NIL income covers school. Can I do anything with that money?”
We’re hearing this question more and more as NIL changes how college gets paid for. Good news: there’s another option.
Under SECURE 2.0, unused 529 money can roll into a Roth IRA in the student’s name, up to a $35,000 lifetime limit, if the account and student meet every rule:
→ 15-year account age
→ 5-year lookback on contributions
→ Roth IRA has to be in the student’s name
→ Earned income requirement
(NIL income can count)
→ Annual and lifetime limits
Important disclosures: This is a hypothetical story and not indicative of any specific situations or client. It is presented only as an example and not intended as investment advice. Investing involved risk and there is no assurance that any investment strategy will be successful. Like Traditional IRAs,
contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. May be subject to state, local, and/or alternative minimum taxes. Changes in tax laws or regulations may occur at any time and could substantially impact your situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors we are not qualified to render advice on tax or legal matters. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. 529 plans come with fees and expenses, and there is a risk they may lose money or underperform. Most states offer their own 529 programs, which may provide benefits exclusively for their residents. Please consider whether the state plan offers any tax or other benefits. Tax implications can vary significantly from state to state.
