Can I Roll Over a 529 Into a Gold IRA?

529 plan

More and more Americans today are taking steps to protect their financial well-being. Concerned about high inflation and the risk of recession, they’re trying to keep their assets safe so that they don’t suffer massive losses as many investors did in 2008.

One increasingly popular way of protecting wealth is a gold IRA. A gold IRA is an IRA account that owns physical gold coins or bars. It’s subject to all the same rules and regulations that any other IRA account is. And one of its major benefits is that assets from existing tax-advantaged accounts such as a 401(k), 403(b), TSP, IRA, or similar retirement accounts can be rolled over or transferred into a gold IRA tax-free.

But those aren’t the only tax-advantaged tax accounts that exist. There are others that exist to help fund health care or education expenses. One of those is known as a 529 plan. It’s a tax-advantaged plan that exists to pay for qualified education expenses for you or a designated beneficiary. And one increasingly common questions that’s popping up is: can I roll over a 529 into an IRA?

That’s a perfectly understandable question. After all, both a 529 and an IRA are tax-advantaged accounts. And in many cases your 529 is going to be investing in the same types of assets as your IRA or 401(k). So if you can roll over or transfer your 401(k) or IRA assets into a gold IRA, can you roll over a 529 into a gold IRA?

The Answer Is…

Unfortunately, the short answer is no, there is no way to roll over assets directly from a 529 into an IRA. That’s because 529 assets are supposed to be used for qualified educational expenses, not for retirement. So if you want to maintain the tax protections of your 529 assets, you may be out of luck.

That leaves you with the option of watching your 529 assets lose value in the event that a recession occurs and markets start to decline. Or you could take a non-qualified distribution, pay any taxes and penalties, and invest the money elsewhere, such as in a Roth IRA.

If you decide on that course of action, you’ll be subject to the same IRA contribution restrictions as other IRA accounts, so you’ll want to consult with a tax advisor to discuss the financial ramifications of such an action.

But the limits on 529 rollovers are in Congress’ sights right now. A bipartisan bill introduced by Sens. Richard Burr (R-NC) and Bob Casey (D-PA) would allow holders of 529 plans to roll any unused assets in those accounts into a Roth IRA without having to pay any additional penalties. If this bill were to make it into law, it could allow you to roll over 529 funds into a Roth gold IRA, allowing you to protect those funds with an investment in gold.

It’s unclear right now whether this bill will make it out of Congress, or if it will be considered as a standalone bill or get rolled into a larger retirement bill. But it shows that Congress is aware of the current situation and that at least some in Congress are looking for a fix.

At nearly $500 billion, the amount of money held in 529 plans pales in comparison to the amount held in 401(k) or IRA accounts, but it’s still a large sum of money. And if families can’t protect those funds through rollovers, they could stand to lose a great deal.

Other Rollover Options

While you may not yet be able to protect your 529 assets with a direct rollover into an IRA, that doesn’t mean that you can’t protect other assets with a gold IRA rollover. If you have assets in a 401(k), 403(b), TSP, SIMPLE IRA, SEP IRA, Traditional IRA, or similar retirement account, you can roll over or transfer them into a gold IRA tax-free.

That allows you to protect your existing assets by owning physical gold coins or bars. These gold IRA rollovers are one of the most popular methods of funding a gold IRA, and allow you to protect gains you’ve already made, putting them to use by owning gold.

Protecting Your Wealth With Gold

With gold’s track record of making gains even when markets aren’t, such as in 2008, or its phenomenal growth record during the stagflation of the 1970s, it’s no wonder more and more people want to add gold to their portfolios. Gold has served as an inflation hedge and a safe haven asset for centuries, and continues to serve that purpose today.

If you have assets sitting unused in a 529 account that you want to try to protect against loss due to inflation or a coming recession, talk to a tax professional today to see what the tax implications of moving your 529 assets into an IRA are. Even with the potential for taxes and penalties, people have still distributed 529 assets in order to buy gold. And if you want to open up the options for 529 account holders to do direct rollovers to an IRA, contact your Congressman and Senators to see where they stand on the legislation that has been introduced in Congress.

With all the options available to Americans today, there’s no reason to leave your assets exposed to the ups and downs of markets if you have options available that can help protect you. Give the precious metals experts at Goldco a call today to learn more about how you can safeguard your savings with gold.

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