A provision in the SECURE 2.0 Act, effective as of January 1, 2024, was designed to encourage college savings by allowing account holders to transfer up to $35,000 from 529 college savings plans into Roth individual retirement accounts, provided certain conditions are met. One key requirement is that the 529 account must have been maintained for at least 15 years. However, ambiguity remains over whether the 15-year period applies to the account itself or to the designated beneficiary.

The legislation references a “qualified tuition program of a designated beneficiary” maintained for 15 years, but it does not explicitly clarify if changing the beneficiary resets this clock. This detail has significant financial implications for families, especially since many 529 plan owners alter beneficiaries for various reasons. For example, some parents open accounts in their own name and designate their child as the beneficiary later, sometimes when the child is already a teenager. If changing the beneficiary effectively restarts the 15-year timeline, it could delay when funds become eligible for rollover into a Roth IRA, potentially reducing the long-term compounding growth significantly.

Under current 529 plan structures, there is one account owner and one beneficiary per account. While individuals can open a 529 account for their own education, typically parents or grandparents establish accounts for children. Reasons for delaying beneficiary designation include initial account setup before a child’s birth or managing accounts across multiple grandchildren. However, according to Ascensus, a major administrator of 529 plans, changing the beneficiary technically requires opening a new account, raising concerns among knowledgeable account holders about the impact on the 15-year requirement.

The College Savings Plan Network, representing state officials and industry stakeholders, anticipated this confusion shortly after the legislative enactment. In September 2023, the group formally requested clarification from the U.S. Treasury Department, arguing that resetting the 15-year clock for each beneficiary change would contradict the intent of Congress, which sought to create flexibility for these accounts while preventing last-minute use of 529 funds as disguised Roth contributions.

Nearly three years after the SECURE 2.0 Act’s passage, no official guidance has been issued on this matter. A 2025 Treasury document suggests that clarifying regulations could be forthcoming soon. Michael L. Hadley, a benefits attorney based in Washington, noted that while the Internal Revenue Service is prioritizing regulations for other major legislation, the 529 rollover issue remains on the agency’s agenda but may be delayed due to resource constraints.

Observers expect the Treasury to avoid rules that would penalize routine beneficiary changes by restarting the clock. Still, uncertainty remains, and experts recommend that account owners practice “good beneficiary hygiene” by naming the intended beneficiary as early as possible and maintaining separate accounts for multiple children if Roth rollovers are anticipated. Should the Treasury’s eventual guidance confirm that beneficiary changes do reset the 15-year period, early designations will prove critical for maximizing tax-advantaged growth and rollover opportunities.