529 college savings plans:
superfunding, state plans, Roth rollover.
529 plans are tax-advantaged education savings accounts. This page covers which state plan to use regardless of where you live, how superfunding works, and the new SECURE 2.0 rule that lets unused 529 funds roll into a Roth IRA.
Use Nevada, Utah, or New York plans for the best investment options regardless of your state. You do not have to use your state's plan. Starting a 529 at birth with $100/month at 7% grows to roughly $43,000 by age 18. Superfunding lets you contribute 5 years of gift-tax exclusions upfront, currently $95,000 per person in 2026. SECURE 2.0 lets you roll unused 529 funds into a Roth IRA for the beneficiary, up to $35,000 lifetime.
How 529s work
- Contributions: after-tax. No federal deduction. Many states offer a state deduction for in-state plan contributions.
- Growth: tax-free.
- Qualified withdrawals: tax-free. Covers tuition, fees, books, supplies, room and board, computers verify×DON'T TRUST, VERIFYClaim: 529 qualified expenses include tuition, required fees, books, supplies, required equipment, computers, and room and board for at least half-time students.Verify at: IRS Topic 313 ↗ and Publication 970 ↗Also includes up to $10,000/yr K-12 tuition and up to $10,000 lifetime for student loan repayment..
If your child does not attend college: change the beneficiary to another family member, withdraw (earnings taxed plus 10% penalty), or roll into a Roth IRA under the new SECURE 2.0 provision (see below).
Which state plan to use
You do not have to use your state's plan. You can use any state's plan for any school in any state. Pick based on investment options and fees.
Vanguard index funds. Low expense ratios. Flexible investment options. One of the top-rated plans for out-of-state users. my529.org ↗
Very low-cost Vanguard funds. NY residents get state deduction ($5,000 single, $10,000 joint). nysaves.org ↗
Vanguard index options. Low fees. No state deduction (Nevada has no income tax).
Use your state's plan when the state offers a significant deduction AND the plan has acceptable funds. NY, IL, VA, OH qualify for many residents.
Saving for College ↗ maintains current rankings and fee comparisons.
Superfunding
The annual gift-tax exclusion for 2026 is $19,000 per person per recipient verify×DON'T TRUST, VERIFYClaim: 2026 annual gift tax exclusion is $19,000 per person per recipient, subject to inflation indexing.Verify at: IRS gift tax FAQ ↗IRS publishes annual exclusion amounts each fall.. 529 plans allow a special 5-year election: contribute up to 5 years of exclusions in a single year without triggering gift tax.
- Single: $95,000 per beneficiary
- Couple: $190,000 per beneficiary
- No additional gifts to that beneficiary for 5 years without triggering gift tax
Why it matters: $95,000 invested at 7% for 18 years grows to roughly $323,000. $19,000 per year for 18 years at 7% grows to roughly $69,000. Superfunding advantage: about $254,000. If you have the capital upfront, superfunding dramatically outperforms annual contributions.
The Roth IRA rollover (SECURE 2.0)
Effective 2024, unused 529 funds can be rolled into a Roth IRA for the 529 beneficiary verify×DON'T TRUST, VERIFYClaim: SECURE 2.0 Section 126 allows 529-to-Roth IRA rollovers with a $35,000 lifetime cap per beneficiary and a 15-year account minimum.Verify at: SECURE 2.0 Act ↗ and IRS guidance ↗Section 126 of SECURE 2.0. Additional IRS guidance issued in subsequent years..
- 529 account must be at least 15 years old
- Cannot roll contributions or earnings from the past 5 years
- Annual limit: Roth IRA contribution limit for that year ($7,500 in 2026)
- Lifetime limit: $35,000 per beneficiary
- Beneficiary must have earned income at least equal to the rollover amount
This partially eliminates the "what if they do not go to college" objection. Excess funds can become retirement savings for the same child.
Related
Last updated 2026-04-22. Not financial or tax advice. Confirm current limits on IRS.gov.
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