How to Make a Fidelity 529 to Vanguard Roth IRA Rollover

Ever since the SECURE 2.0 Act was signed into law in December 2022, I have been keeping an eye on the provision allowing a tax-free rollover of unused 529 plan funds into a Roth IRA for the 529 plan beneficiary. We're done paying for the education of our children at this point, but ended up over-saving because of their decision to attend public universities that offered generous merit-based scholarships.

Ben Henry-Moreland of Kitces.com has a nice overview of the 529-to-Roth provision here, with these highlights:

• The 529 plan must have been maintained for a period of at least 15 years before the date of the rollover
• The amount of each rollover cannot exceed the aggregate amount of contributions (and earnings attributable thereto) made earlier than the 5-year period before the date of the rollover
• The amount of each rollover also cannot exceed the IRA contribution limit for that year, minus any amounts that the taxpayer contributed directly to the IRA that year
• The amount of each rollover cannot exceed the aggregate amount of contributions (and earnings attributable thereto) made earlier than the 5-year period before the date of the rollover
• The maximum amount of funds that a 529 plan beneficiary can roll into a Roth IRA over their lifetime is $35,000
• Unlike making a normal Roth IRA contribution, where the ability to contribute to a Roth phases out for individuals with higher incomes, there are no income-based phaseouts for a 529-to-Roth rollover

We met all of the above criteria and I checked in with my accountant about potential state tax implications, so I was ready to proceed with the rollover of funds from our Fidelity 529 plans to existing Vanguard Roth IRAs for my children.

This process is initiated with the institution where the 529 plan is held, so I scrolled down to the "To transfer from a Fidelity-managed 529 to an external Roth IRA" section on Fidelity's Making 529 withdrawals and contributions landing page. This states that the procedure to transfer a Fidelity 529 plan to an external Roth IRA is initiated by using this withdrawal form pdf and having a physical check mailed directly to Vanguard.

For the first page of the form, I entered my name, SSN, and phone number for line 1 and the child's name and SSN for line 2. For line 3, I entered the Fidelity 529 plan account number and checked the boxes including "529-to-Roth IRA transfer" and "Leave account open for future possible contributions":

For the second page of the form, I checked the "ONLY the following amount(s) from the following portfolio(s)" box and entered the 529 plan portfolio name and the contribution amount ($7,000 max for 2024) for line 4:

For the third page of the form, I checked the "Current Year Contribution" and "External Roth IRA" boxes. I had already contacted Vanguard support for the proper mailing address to have the check sent to, so I used that address and the Vanguard Roth IRA account number to complete line 5 on this page:

Finally, to complete the form, on the fifth page I entered my name and signed the form for line 6:

At this point it was time for my completed form to be sent to Fidelity. The form gives you a P.O. Box in Cincinnati, OH for mailing via USPS, but instead I uploaded my completed pdf to fidelity.com to the attention of "Account services" via their Secure Message Center (login required) to expedite the process.

Once the Fidelity document upload was complete, it took 9 days for the money to appear in the Vanguard Roth IRAs:

• Day 1: File upload to fidelity.com
• Day 2: Received confirmation message of receipt of documents from Fidelity
• Day 3: Received confirmation message from Fidelity that the check has been printed and will be mailed shortly
• Day 9: Funds appeared in Vanguard Roth IRA

September 2024 Financial Asset Roundup

Here are my current financial assets as of the market close on September 12th, 2024:

Asset	Aug 2024	Sep 2024	Change
Checking	1,399	1,848	449
Money Market	74,346	78,084	3,738
Savings Bonds	242,768	243,533	765
Treasurys	100,000	100,000	0
CDs	51,495	51,828	333
Brokerage	441,526	492,227	50,701
401k	400,822	416,376	15,554
Roth IRA	300,729	308,792	8,063
IRA	1,466,791	1,500,048	33,257
529 Savings	180,297	183,165	2,868
Total Assets	$3,260,173	$3,375,901	$115,728
			3.55 %

The S&P 500 had a strong month, rising 2.83% (+15.21% YTD) since the last update:

(chart courtesy of nasdaq.com)

On the jobs front, the unemployment rate for August fell to 4.2%. A solid 142,000 new jobs were added, showing a stronger number after July's numbers were revised downward. Oil prices fell to the $67 level (from $79) from a weakening demand outlook, with that $67 price reflected in a local unleaded regular gasoline price of $2.99 at my last fill-up.

On the financial front, my assets have again hit an all-time high, surpassing the previous high from July 2024! I did the usual Fidelity 401k transaction (FSKAX) and Vanguard VTI purchase in my taxable brokerage account. I also took an S Corp distribution and my 13 week T-Bills (5.395%) matured and were rolled into new ones at 5.103%. I also opened some Navy Federal add-on CDs as an interest rate hedge and started the process to rollover excess Fidelity 529 plan money to existing Vanguard Roth IRAs for my children. Once that is completed I should probably dedicate a post to documenting the process since I had to reach out to Fidelity and Vanguard to get the details correct.

Another thing I recently learned was that as of January 2025, you will no longer be able to buy paper Series I savings bonds with your tax refund (hat tip to David Enna of tipswatch.com). After conversations with my CPA over the years I'm sure this wasn't a terribly popular program with most taxpayers, but it looks like I won't be making any more supersized January estimated tax payments to help bulk up my paper I Bond holdings. I should probably consider converting everything to electronic format at treasurydirect.gov to make future redemptions easier, but that might be a project for next year.

As for the non-financial, everyone is back to school and the bills are finally coming due for our family vacation last month. I'm also working to update the old water conditioning equipment we have for our home's well water, which testing has confirmed to contain PFAS "forever chemicals". It's kind of scary that everyone has probably been ingesting this stuff for years without knowing it.