Lawmakers Introduced Bill to Expand 529 Rollovers

The proposed legislation would remove the lifetime limit on transferring excess 529 plan funds to a Roth IRA.

Updated on Oct. 14, 2026 in Retirement Planning

Bold flat-color editorial illustration of a glass piggy bank shaped like a graduation cap, representing financial policy for savings plans. — Senators Ted Cruz and Lisa Blunt Rochester introduced legislation to remove the $35,000 lifetime limit on 529-to-Roth IRA rollovers. AI Illustration. Upload story photo >

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Should federal law allow unlimited rollovers from unused college savings plans into personal retirement accounts?

Senators Ted Cruz and Lisa Blunt Rochester have introduced the 529 Retirement Enhancement Act of 2026. The bill seeks to eliminate the current $35,000 lifetime cap on rollovers from 529 college savings plans to Roth IRAs.

Why it matters

The legislation aims to help families avoid federal penalties on unused 529 savings by providing more flexibility to transition excess funds toward retirement. This initiative could allow parents to invest more aggressively in a child's future financial security.

Current law limits tax-free rollovers to a $35,000 lifetime maximum, with nonqualified withdrawals otherwise subject to a 10% federal penalty on earnings. The proposed change would allow excess 529 assets to be moved to a Roth IRA, provided the account has been held for at least 15 years.

The players

Ted Cruz

Ted Cruz is a United States Senator who is co-sponsoring the legislation to increase retirement savings flexibility.

Lisa Blunt Rochester

Lisa Blunt Rochester is a United States Senator who is partnering to introduce the 529 Retirement Enhancement Act.

The details

The bill allows for the transfer of excess 529 assets into a beneficiary's Roth IRA up to the annual contribution limit, which is $7,500 for those under 50 in 2026. Estimates suggest a 22-year-old rolling over $75,000 in excess funds over a decade could accumulate approximately $2.1 million by age 62.

Congress passed the SECURE Act 2.0 at the end of 2022.
The 2026 annual gift tax exclusion is set at $19,000 per person.
The article was published on October 14, 2026.

Market Dynamics

This legislation builds upon the foundation of the SECURE Act 2.0, which first authorized 529-to-Roth rollovers in 2022. It represents a broader shift toward integrating education and retirement savings vehicles to provide greater long-term fiscal flexibility for American households.

If passed, this bill would allow families to move more excess education savings into retirement accounts without facing the current 10% penalty on nonqualified withdrawals. This provides a potential strategy for maximizing the long-term compounding growth of unused 529 assets.

The takeaway

Families with significant 529 balances should monitor this legislation, as it could eventually allow for larger tax-advantaged transfers to retirement accounts. Investors should ensure they understand current contribution limits, such as the 2026 $7,500 Roth IRA cap, when planning long-term strategies.