Have you inherited an IRA from a non-spouse who passed away after 1/1/2020? Beneficiaries of pre-tax retirement accounts have always had to pay taxes on what they inherit. However, on 1/1/2020, the SECURE Act was passed, changing the annual amount that beneficiaries would have to withdraw. Beforehand, non-spousal beneficiaries could: Cash out the account in one lump sum and pay taxes on that amount Take the account out over five years and pay taxes on it Take distributions the year after the account owner passed away and take withdrawals over their lifetime (a stretch IRA) Most non-spousal beneficiaries must empty their inherited account within 10 years following the original owner's death (there are some exceptions for someone who is disabled, the chronically ill, those who are within 10 years of age of the deceased, and minor children).  Unfortunately, the IRS made some changes. Learn what it is—and if it impacts you—in this episode of Retire with Ryan.  You will want to hear this episode if you are interested in... [1:50] My on-demand Retirement Readiness Review Course [2:16] What’s new with inherited IRAs? [5:56] The IRS announcement about required minimum distributions [9:32] The IRS changed the penalty for missing IRA distributions [10:07] IRS Notice 2044-25: The RMD for 2024 is being waived  [11:13] What should you do with this information? [13:04] What if you inherited a Roth IRA? The IRS announcement about required minimum distributions (RMDs) Everyone thought that non-eligible beneficiaries who opted for the 10-year window could choose how to withdraw the funds (as long as the account was emptied). We thought that you could minimize distributions in years where their income was higher and take higher distributions when their income was lower, choosing when to pay taxes on the account (and avoiding being in a higher tax bracket). Unfortunately, in February 2022, the IRS issued regulations to reflect the changes in the SECURE Act. They divided non-eligible beneficiaries into two groups: People who inherited an account from someone who passed away before they reached their RMD age. Someone who passed away after they reached their RMD age. If you inherit an IRA from someone who hadn’t yet reached their RMD age could wait until the 10th year to take distributions. However, if the person died after they’d started taking RMDs, the beneficiary would have to take distributions out every year (continuing the distributions of the original owner). Thankfully, the IRS extended some relief and said if you were supposed to take RMDs in 2021–2024, the requirement would be waived.  The IRS also changed the penalty for missing IRA distributions from 50% and reduced it to 25%. If you missed a year where you were supposed to take it—as long as you make up the difference in two years—the penalty would be reduced to 10%.  What should you do with this information? It’s time to do some tax projections of your future income. If you’ve inherited a retirement account, you must deplete it in the next 10 years. If you anticipate being in a higher tax bracket in the future, it may make more sense to take a distribution this year in a lower tax bracket.  If you inherited an IRA in 2020, you still have seven years left to empty the account. How will it impact your taxes? Where will a distribution land you on the tax bracket scale?  What if you inherited a Roth IRA? Listen to hear how required minimum distributions work for an inherited Roth IRA!  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel New Beneficiary IRA Distribution Requirements, #180   Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

If you are divorced and approaching 62, you may qualify for social security benefits based on your ex-spouse's earning record. But who qualifies? When can you collect it? How much can you collect? Does your ex-spouse find out? I’ll answer the things you need to know in this episode of Retire with Ryan.  You will want to hear this episode if you are interested in... [1:11] Sign up for Retirement Readiness Review [1:46] Divorce and social security [3:12] What makes you eligible for the benefit?  [6:28] Other things you need to know [8:06] How much can you receive?  [11:49] What if your ex-spouse is deceased? [13:51] How to apply (and what you need) [16:43] What should you do if you’re divorced? What makes you eligible for the ex-spousal benefit? You’re eligible if: You were married at least 10 years You haven’t remarried  Your ex-spouse is 62 or older and eligible for benefits The divorce occurred at least two years prior to applying Your ex-spouse doesn’t need to have filed for benefits Your own benefit cannot be higher than the spousal benefit. That simply means that you’re able to apply for your benefits and the spousal benefit and choose the higher of the two. You’re eligible for up to half of your ex-spouse's benefit or your own. What else do you need to know?  Benefits for current or other ex-spouses are not affected. If your ex-spouse is collecting, it won’t impact what they’re receiving.  Secondly, your ex-spouse cannot stop you from claiming this benefit. They have no control over this. Divorce settlements have nothing to do with this. If you qualify, you’re entitled to the benefit.  Lastly, any ex-spouse can claim benefits. Your spouse could claim up to half of your benefit as well.  How much can you receive?  If you were born after 1960, your full retirement age is 67 or later. For anyone born before 1959, your full retirement age is 66 and 10 months. Every year before that the full retirement age decreases by two months. Why is this important? To get the full 50% ex-spousal benefit, you have to wait until your full retirement age. If your full retirement age is 67 and you want to collect at 62, you’d get 32.5% of your ex-spouse’s full retirement benefit. If you waited until you turned 63, you’d get 35%. The percentage increases every year until it caps at 50% when you hit your full retirement age.  If you claim your benefit before your full retirement, there’s also a limit to how much you can earn and still receive the benefit. The earnings limit in 2024 is $22,320. That limit is in effect from 62–66. If you earn over that amount, your benefit will be reduced by $1 for every $2 you make over $22,320.  The year you retire, you can make up to $59,520 before your benefit is reduced by $1 for every $3 you’re over. Starting the month you retire, there’s no limit and you can receive your full benefits.  How does it work if your ex-spouse is deceased?  This is known as a surviving divorced spouse benefit. The same eligibility rules apply—with a few changes: You can start climbing benefits as early as age 60 (with a reduction) You can apply for the survivor benefit as a restricted application and let your own benefit grow If your benefit is more than half of your deceased ex-spouse’s benefit, you can collect the percentage you’re eligible for while yours continues to defer. Your benefit caps out at 70 at which point you’d collect your benefit. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Online social security calculator SSA.gov Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

Medicare is confusing and complicated. Most people nearing retirement age have likely heard numerous mistruths regarding when to get it, what it does for you, and so much more. That’s why I’m busting the 10 most commonly perpetrated Medicare myths so you’ll know how to discern fact from fiction—and put your mind at ease.  You will want to hear this episode if you are interested in... [0:53] Sign up for my online course: Retirement Readiness Review [1:21] Myth #1: You have to enroll in Medicare when you turn 65 [2:57] Myth #2: You’re automatically enrolled in Medicare when you turn 65 [3:55] Myth #3: Medicare will tell you when it’s time to enroll [4:27] Myth #4: Medicare is free [5:52] Myth #5: Your income levels impact whether or not you qualify  [6:28] Myth #6: Having COBRA allows you to delay enrollment [7:16] Myth #7: You should enroll in Medicare Part A as soon as you can [8:54] Myth #8: Medicare Advantage plans are expensive [9:52] Myth #9: Medicare Advantage plans are better than Medigap plans [11:42] Myth #10: Once you select a plan, you’re stuck with it Myth: You have to enroll in Medicare when you turn 65 This is false. If you have job-based health insurance with a company that has 20 or more employees, you don’t have to sign up for Medicare immediately. You can wait to sign up until you stop working or you lose your health insurance. Why would you want to?  There may be excess costs you wouldn’t need to pay if you still have insurance through your employer. But if you’re self-employed or don’t have an insurance policy that covers more than 20 people, and you don’t want to sign up for Medicare, you’ll get hit with a late enrollment penalty.  Myth:You’re automatically enrolled in Medicare when you turn 65 You’re only automatically enrolled if you’re already collecting Social Security when you turn 65. Everyone else has to enroll during the three months before they turn 65 or the three months after their 65th birthday month. If you’re not going to enroll at 65, you have an 8-month window to enroll after your insurance coverage ends (or you’ll be subject to a penalty).  Keep in mind that Medicare will not tell you when it’s time to enroll. Though you’ll get a lot of advertisements in the mail for supplemental plans, Medicare will not send you a reminder. To enroll, you go to SSA.gov and click on “enroll in Medicare.”  Myth: Medicare is free Medicare Part A covers part of the cost of a hospital stay. As long as you or your spouse has worked for 10 years or more in the United States, Part A is free. However, Part B (which covers preventative care) starts at $174.70 per month.  Everyone pays the minimum premium and depending on your income level, you may pay far more. The premium may increase every year. There are many other expenses that Medicare doesn't cover. Many people also say that you should enroll in Medicare Part A as soon as you can because it’s free. This makes sense—only if you don’t have a high-deductible insurance plan. But with high-deductible health plans, you’re typically eligible for an HSA.  As soon as you enroll in Part A, that disallows you—and your employer—from making contributions to an HSA. You also have to remove any contributions you’d made from the prior six months before enrolling. I tackle a lot more myths you need to be aware of, so make sure you listen to the whole episode! Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

How can you protect your data and personal information from IRS scammers and criminals? Everyone is afraid of being audited by the IRS. Maybe you’re scared you may have filed your taxes incorrectly. Criminals take advantage of that fear to perpetuate their scams. But there are some simple things you can do to avoid falling victim to these scams. I’ll share 7 tips you can use to protect yourself from IRS scammers in this episode!  You will want to hear this episode if you are interested in... [1:15] Sign up for the Retirement Readiness Review! [2:42] Tip #1: The IRS only reaches out through the mail [4:43] Tip #2: Be suspicious of emails from the “IRS” [6:26] Tip #3: Don’t send checks through the mail [7:44] Tip #4: Protect your personally identifiable information (PII) [8:49] Tip #5: Pay your bills electronically when possible [9:15] Tip #6: Request direct deposit for paychecks [10:14] Tip #7: Set up two-factor authentication What you need to know about the IRS Did you know that the IRS doesn’t make phone calls or leave voicemail messages? They won’t send a text or contact you on social media. They don’t use email either. If the IRS has a problem with you, they’ll send you a letter.  So if you get a phone call saying someone is from the IRS and they need more information from you, hang up, and block their phone number (and report it as spam).  These scammers threaten people, saying they’ll lose their immigration status, driver’s license, business license, or they’ll call law enforcement to arrest them. Don’t fall victim to these threats.  If you do receive a letter from the IRS, don’t panic. The majority of the time it’s a simple fix that your CPA or financial advisor can help you navigate. It may be as simple as a missing 1099.  Be suspicious of emails from the “IRS” Anytime you get an email from someone unfamiliar, hover over the address of the email to see who it’s from. You’ll see mistakes in the email addresses (often misspellings) from scammers. Make sure you never click on any links in an email before you know it’s from someone or a business you trust.  If you click on one of these links, you’re allowing the scammer into your computer or phone. They can install spyware or hijack your files. They’ll lock your files and demand a ransom to get them back. 10 years ago, this happened to me.  Protect your personally identifiable information (PII) PII is your social security number, DOV, driver’s license, bank account information, etc. Don’t email anything that contains your PII—even if it’s to someone you know and trust. If your email is ever hacked, the hackers can access this information and use it to open accounts in your name. Most financial firms offer upload options such as Box or ShareFile.  One of the best things you can do to protect your information is to set up two-factor authentication whenever you can. Two-factor authentication requires that you offer two ways of proving that it’s you logging in. You may need to provide a username, password, and PIN. You can use an authenticator app that provides a PIN that resets every 30 seconds. Or, you can have a pin texted to you. If a scammer can steal your username and password, they probably can’t breach the two-factor authentication.  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel ShareFile Box USPS Informed Delivery Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

Do you usually get a tax refund? What do you typically do with your tax refund? Do you have it earmarked for a specific purpose? As we’re inching closer to the tax filing deadline, I thought it would be interesting to share some ways you can wisely invest your tax refund. I’ll cover 9 ideas you can consider to make good use of your money.  You will want to hear this episode if you are interested in... [1:42] Why are you getting a tax refund?  [2:36] Idea #1: Save it for next year's taxes [3:03] Idea #2: Increase your savings  [4:05] Idea #3: Pay down high-interest debt [4:49] Idea #4: Contribute to a Roth IRA  [5:12] Idea #5: Home improvement projects  [6:02] Idea #6: Increase retirement contributions  [7:08] Idea #7: Plan a vacation [7:51] Idea #8: Invest in yourself  [8:32] Idea #9: Buy US Savings Bonds  Why are you getting a tax refund? If you’re getting a tax refund, you should be asking why. You’re giving the government a free loan for the entire year. You aren’t paid interest when you receive a refund. Why not investigate if you can increase your withholdings, so you can keep more of your money? If you are going to get a refund, here are some ways you could invest it.  9 ideas for investing your tax refund Save it for next year's taxes: If you think your taxes will increase because your income fluctuates, it might be a good idea to set the money aside in a short-term CD or money market. Increase your savings: You need 3–6 months of living expenses in an emergency fund (which could be kept in a short-term CD or money market) in case you lose your job or another unexpected situation arises. Pay down high-interest debt: If you’re carrying credit card or student loan debt in excess of 10%, pay it off as soon as possible. Why 10%? Because it’s hard to earn more than 10% over time in the stock market as an average annual return.  Contribute to a Roth IRA: If you don’t have a Roth IRA, you can set one up (provided you qualify) and start contributing to it.  Home improvement projects: Improving your kitchen or bathroom(s) can increase the value of your home down the road. Even an outdoor patio or deck space may be a good investment to get a return on your money.  Increase retirement account contributions: If you still have room to contribute to your 401k, you can increase what you contribute through payroll contributions. Or, you can shift your tax refund into the account over time. If you contribute more throughout the year, less will be sitting with the IRS for you to get back in a tax refund.  Plan a vacation: We don’t know what the future holds. If you’ve wanted to plan a specific trip for a long time, why not take some of this money and invest it in a trip?  Invest in yourself: Can you take a course? Get a designation in your field? These things can pay large dividends down the road, especially if they help increase your income or get you closer to a job promotion.  Buy US Savings Bonds: The interest they pay is based on a fixed rate when you buy the bond and a variable rate tied to the consumer price index. You’d always get a minimum for the life of the bond and a variable rate every six months. Listen to the whole episode for a more in-depth look at each idea! Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel I bonds interest rates Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

Do you own stock in the company that you work for in your 401K? Net unrealized appreciation could potentially save you a significant amount of money on your taxes when you start making withdrawals. I’ll share how to take advantage of the process as well as mistakes to avoid making in this episode of Retire with Ryan.  You will want to hear this episode if you are interested in... [1:00] Sign up for my Retirement Readiness Review! [1:26] What is net unrealized appreciation? [3:31] How net unrealized appreciation works [5:05] How to process the distribution  [7:41] Where people run into problems [10:09] Net unrealized appreciation when you aren’t retired [12:23] Reminder: Sell the stock in a lower tax bracket Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan

The Federal Reserve Met on 3/20/24 to discuss monetary policy and whether or not to raise or lower interest rates. They announced that they won’t make any changes. Most experts believe that they’ll lower interest rates in June. So should you start selling your money market funds and short-term bond funds? When should you do it? Should you move the money into something that could benefit from decreasing interest rates? In this episode, I’ll discuss why we invest in money market funds, if you should move your money out, and where you should consider shifting it.  You will want to hear this episode if you are interested in... [1:13] Sign up for the Retirement Readiness Review! [1:41] Why should you invest in money market funds?  [4:33] Why move money out of your money market fund? [6:30] What might make money market rates fall?  [8:42] What do you buy to replace money market funds? Why should you invest in money market funds? Money market funds should be considered part of your overall asset allocation. We look at money in terms of buckets. You need some money in risky buckets to grow your money to pace against inflation (stocks, commodities, real estate investment, high-yield corporate bonds, etc.). The other money is your “safe” money (cash, money market funds, government bonds, short-term corporate bonds, etc.). I’ve been recommending that you move money from your bank or other low-yielding accounts and move them into money market funds for the last year and a half. Why? Because you can now earn about 5% on your money market funds (depending on where you keep it). We typically use the Schwab Value Advantage Money Fund® (SWVXX). And as of 3/20/2024, its current yield is 5.18% with an annual expense ratio of 0.340%.  Money market funds are relatively low-risk and liquid. They trade for a dollar value that rarely changes. What changes? The interest rate that the funds pay (which can reset as often as every seven days). Why move money out of your money market fund?  You invest in a money market fund to help you earn more interest on your safe money. You want to choose what gives you the best rate possible. The rate you get is dependent on duration—the length of time that you’re investing your money.  Currently, looking at the treasury yield curve, you’ll earn more interest by having your money in shorter-term treasuries than you would versus long-term treasuries. Eventually, the curve will reverse and long-term investments will yield more interest. That’s when you’d consider reducing the amount of money out of money market funds.  Until the Fed raised interest rates in 2022, money markets were paying almost nothing. As the Fed raised interest rates, the interest paid increased. What might make money market rates fall?  The primary driver is inflation. The Fed monitors inflation so they can make decisions about what to do with interest rates. Inflation has been high. The Fed doesn’t want to cut rates too quickly because it could trigger more inflation.  What could you buy to replace money market funds? How do you reduce your exposure? Listen to hear some ideas! Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel The 5-Step Portfolio Process, Ep #17 Daily Treasury Yield Curve Rates Schwab Value Advantage Money Fund® SPDR® Portfolio Aggregate Bond ETF SPDR® Portfolio Long Term Treasury ETF Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

As we get closer to the tax filing deadline (April 15th), I wanted to talk about contributing to a Roth IRA or traditional IRA. In this episode, I’ll cover contribution and deduction limits, spousal IRAs, and non-deductible IRA contributions (and why you’d want to consider them).  You will want to hear this episode if you are interested in... [1:16] Sign up for Retirement Readiness Review! [1:49] Traditional IRA contributions/deductions [6:45] Roth IRA contribution limits [9:02] The spousal IRA [10:22] Non-deductible IRA contributions Traditional and Roth IRA basics Everyone with earned income can contribute to an IRA or Roth IRA (up until the filing deadline). Earned income includes wages, salaries, tips, and net self-employed income. Your spouse can contribute on your behalf if you don’t have earned income.  The max you can contribute is $6,500 (if under 50) or $7,500 (if over 50). You can split the money between a traditional or Roth IRA. If you’re looking for an additional tax deduction, you can contribute to a traditional IRA and get a tax deduction equal to the amount you contribute.  Do you have a retirement plan through your work (401K, 403B, 457 plan, etc.)? If you do, you have to look at your modified adjusted gross income (MAGI) to determine if you qualify to contribute. If you don’t have a plan through work, you can contribute the full amount.  With a Roth IRA, you don’t get a tax deduction on your contributions. But when you withdraw the money, the withdrawals are tax-free. To contribute to a Roth IRA, your MAGI must also be under certain limits.  I’ve linked documents in the resources that detail what each of those limits looks like for each filing status. Non-deductible IRA contribution  What is a non-deductible IRA contribution? It’s where you make a contribution to a traditional IRA up to the limit of $6,500/$7,500 but you don’t get a deduction on the contribution. Why would you want to do that?  If you want to pursue a backdoor Roth IRA. If you don’t have an IRA, SEP IRA, or Simple IRA money in your name at the end of 2023, you’d open a traditional and Roth IRA at the same company. You’d contribute to the traditional IRA for 2023. Then you move the money over to the Roth IRA (a tax-free conversion). If you can’t do a backdoor Roth IRA, you can benefit from the tax deferral of a traditional IRA. Any taxes on the increase in value are deferred. You’ll pay tax on the gains when you make a withdrawal (but never on the principal). If you invested the money in a brokerage account, you’d have to pay taxes on an annual basis on any dividends, interest, or capital gains. If you have a 401K through your company, you can roll the after-tax monetary gains to a traditional 401K (separating the contributions from your gains) and convert the contributions to a Roth IRA (similar to a backdoor Roth IRA). What makes the most sense for you in 2023? Listen to learn more about each of the options. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Separating Post-Tax Money from a Traditional IRA, #181 Amount of Roth IRA Contributions That You Can Make For 2023 Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

What is Indexed Universal Life Insurance? Is it something you should consider investing in? Are the rumors you’ve heard about it true? In this episode, Andy Panko (of Tenon Financial) and I dispel 7 myths that are circulating about UILs and we cover what you need to know to make an informed decision about the insurance product.  You will want to hear this episode if you are interested in... What is Indexed Universal Life Insurance? [1:46]  Myth #1: It’s a secret the wealthy don’t want you to know about [4:30]  Myth #2: The IUL cost is lower than a well-managed mutual fund [7:34]  Myth #3: IULs can give you a tax-free retirement [10:18]  Myth #4: An IUL means you can be your own bank [12:20]  Myth #5: Life insurance is a tier-one asset for the banks [16:04]  Myth #6: IULs are better than 401k plans [19:31]  Myth #7: IULs are a “can’t lose” monetary asset [23:59] Should you consider investing in an IUL? [28:24]  What is Indexed Universal Life Insurance? Indexed Universal Life Insurance is often pitched and marketed as a retirement income tool under a host of other names. It’s a complicated product, often sold via misleading information. At its core, It’s a life insurance policy with a death benefit that can build cash value within the policy.  You can take loans against it and money out of it. Some of the benefits can be used toward long-term care expenses. It can be a useful and multi-purpose product. However, misleading claims are often made about these policies during the sales process.  Myth: The IUL cost is lower than a well-managed mutual fund An IUL is a multi-decade-long product. It’s a lifetime commitment. The up-front fees are large. It can be more than 10% the first year and 6–8% beyond that. By the time you get to the 10th year, the fees can be lower (under 5.5%). I bought an IUL and the up-front costs were 17% for the first year.  When you blend it out over the life of the product, it will not be as low as a managed index fund. It’s not reasonable to expect. And you’re not actually invested in index funds—you get exposure through the insurance company buying options on the underlying index.  Myth: An IUL means you can be your own bank You aren’t borrowing money from a bank. And the money in the policy continues to earn interest. You can borrow against the IUL and use the money however you’d like. But it’s no different than if you took a home equity line of credit against your house. You still own the house and it’s full price appreciation but you have a loan collateralized by your house.  People will say that Walt Disney founded Disney because he borrowed against his whole life insurance policy. People insinuate that Disneyland wouldn’t exist without an IUL. All said and done, he took a $50,000 loan against his life insurance policy but it was only 0.66% of the total capital required to launch Disneyland. Life insurance wasn’t the missing link.  Myth: IULs are a “can’t lose” monetary asset The cash value of your account earns interest and it will never be lower than zero. However, you can’t own that cash value in isolation. There are annual fees associated with the policy. Even in the years where you get 0%, you have fees and costs that will cause your cash value to decline. That is still losing money.  Most of them also have a commitment period. If you want to walk away with your money, you’ll likely get charged a hefty fee to do so. If you hold the product for the rest of your life, you will in time have more cash value than you put in. But in the early years, you will have less money than you put in.  Insurance products are designed to be long-term. The people who sell these products are paid on commission. So surrender penalties reimburse the insurance company if the policyholder bails out early.  Should you consider investing in an IUL? Listen to hear what Andy factors into the decision-making process. Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel Andy’s website: Retirement Planning Education Connect with Andy Panko, CFP®, RICP®, EA on LinkedIn Tenon Financial Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact Subscribe to Retire With Ryan

On December 23rd, 2022, congress passed the SECURE 2.0 Act. Among the many changes, one of them had to do with 529 plans. You can now make tax-free and penalty-free rollovers from a 529 plan to a Roth IRA.  This became effective 1/1/2024. Before this, if you wanted to take a non-qualified withdrawal from a 529 plan (using the money for something outside of school expenses) the gain was subject to income tax and a 10% penalty. It’s similar to taking a withdrawal from an IRA.  If you have unused money in a 529 plan, it can be rolled over to a Roth IRA for the beneficiary of that 529 plan—tax and penalty-free. The added benefit is tax-free growth and tax-free distributions when they take money out down the road.  What other details do you need to know? Who qualifies for these rollovers? Learn more in this episode of Retire With Ryan.  You will want to hear this episode if you are interested in... Sign up for the Retirement Readiness Review [0:56]  Tax-free and penalty-free rollovers [1:41]  What are the rollover rules? [3:16]  Questions the IRS still needs to answer [6:13] Does every 529 plan provider allow rollovers? [8:01]  How do you make a rollover? [8:53]  Can you make a rollover? [10:38]  What are the rollover rules? There is a $35,000 lifetime rollover limit per beneficiary. However, you can’t roll over the entire amount at once. You’re still subject to the annual Roth IRA contribution limits for 2024 and beyond.  Someone under 50 can roll over $7,000 to a Roth IRA. If they’re over 50, they can roll over $8,000. If your child has already contributed $3,000 to their Roth IRA, you can only roll over $4,000. Here are some other rules to be mindful of:  The 529 account needs to be 15 years old or older.  The Roth IRA needs to be in the same name as the beneficiary in the 529 plan. The rollover must be a direct rollover (the 529 company makes a check payable to the Roth IRA company—you cannot take receipt of the money) Contributions and earnings on the contributions made on the last five years cannot be converted  A 529 beneficiary needs to have earned income equal to the amount of money being rolled over (if your beneficiary is in high school and doesn’t have a job, you can’t do a rollover) There’s no adjusted gross income earnings limit  Questions the IRS still needs to answer What if the 529 account has been open for 15 years but you changed the beneficiary? Does the current beneficiary qualify? What if you change 529 companies during that time? When you hit the maximum of $35,000, can you change the beneficiary to someone else?  How does your state treat the rollover? Will it be taxed? Who is tracking the gains from contributions? These are some of the many questions that the IRS hasn’t clarified yet.  How do you learn if your 529 plan provider allows rollovers? There are hundreds of 529 providers and no blanket answer. Reach out to your specific provider. The plan I have with Fidelity can process the rollovers. How a rollover is done will vary depending on the provider. For the CHET plan, you complete a form and submit it to make the transfer. Can you make a rollover? Should you make a rollover? Listen to hear my thoughts!  Resources Mentioned Retirement Readiness Review Subscribe to the Retire with Ryan YouTube Channel 529 plan distribution form (Connecticut)  The Connecticut Higher Education Trust 529 Plan Connect With Morrissey Wealth Management  www.MorrisseyWealthManagement.com/contact   Subscribe to Retire With Ryan