Account Basics
You can roll-over your account to another state’s plan at any time.
A rollover is when funds in a 529 account are sent to an account at another state’s 529 plan or to a Roth IRA. If you move to another state or are unhappy with your current state plan, you can roll the account over to a different state plan at any time, one time per year. An owner can rollover funds between 529 plans any time for a different beneficiary as long as that beneficiary is a member of the previous beneficiary’s family. The new receiving state will likely even allow a tax deduction or credit on the funds! These considerations also apply to any rollover from or to a Coverdell Education Savings Account (ESA).
However, in some cases you may be asked to pay back the tax deductions or credits which you initially received at the time of your deposits to the account-losing state. Be sure to check with your current plan before you begin the roll over.
Bill moves from North Dakota to Utah. He finds that Utah will give him a tax credit to move his $3,000 529 there from the North Dakota account. He calls the North Dakota plan to assure there are no fees, then initiates the qualified roll over through Utah’s my529 plan. Alternatively, Bill could leave the North Dakota funds and start a NEW second plan in Utah.
Gwen is frustrated after belatedly reading about her state plan. She found out that she received a small tax break, but that her home state plan has higher yearly investment fees to compensate. Gwen decides to roll her children’s accounts to another state direct-sell plan with lower fees. She can do this penalty free at any time, though she may have to pay back the small amount she received as a tax deduction.
No statement or example on this site should be considered a specific recommendation for your personal situation. Investing and tax strategies each carry significant risks. Examples herein may not apply to your situation. Please consult your estate attorney, tax advisor, or financial advisor for personal advice.