Dots Array

Home   >  

Blog  >   

Leftover Money in Your 529 Plan? Here’s What to Do

Leftover Money in Your 529 Plan? Here’s What to Do

If you are saving up for college — or maybe a family member is doing it for you — a common tool is a 529 savings plan. A 529 plan is an investment account that offers certain tax benefits when the money it contains is used to pay for education-related expenses for its designated beneficiary.

In other words, if you use the money in a 529 plan to pay for tuition for the account’s beneficiary, you get certain tax benefits. There are other types of savings and investment plans to help pay for education-related expenses, too, such as prepaid tuition plans and education savings plans. 

But again, the main draw of the 529 plan is the potential tax savings and benefits, which is why a lot of people use them.

Some people don’t actually end up using all of the money that they save in a 529 plan, though. Yes, it sounds weird — you have money, and didn’t spend it? — but it happens. If you find yourself in that situation, though, there’s a new option for what you can do with at money: Redirect it into a Roth IRA!

This is a new rule that was signed into law when Congress passed it, and the president subsequently signed an omnibus spending bill in December 2022. The new rules say that investors can take up to $35,000 of unused cash in a 529 plan, and roll it over into a Roth IRA. The only thing — you’ll need to wait to do it, because the new rules take effect in 2024.

So, it’s always good to have options, and if you do end up with unused money in a 529 plan, shoveling it over into an IRA can be a great choice when trying to determine what to do with it. In fact, it may be the best choice, depending on your specific financial situation. 

Saving for retirement is critical, but many young people put it off in favor of other financial goals: Buying a house or car, for instance, or just having some fun. For that reason, if you’re able or otherwise in a situation in which this new rule allows you to stash your cash for retirement, it may be a good idea to do so. It’s not a bad idea to check with a professional, though, to make sure that you don’t have any outstanding education expenses to take care of first!

Check out the Money Vehicle textbook — you can find it here on Amazon. And if you like what you see, you can get more content sent directly to your inbox! Sign up for the Money Vehicle Movement Newsletter!

And check out our white paper: “Strategies for Increasing Financial Literacy Rates Among High School and College Students”

More from Money Vehicle:



For exclusive content and early access to all the blog content

The Money Vehicle BLOG is a collaborative effort between founder Jedidiah Collins,CFP®
and Money Vehicle graduates. They tackle a host of topics from Mindset, Investing, Debt,
Insurance & much more!


Download your free guide instantly by entering your details below. Elevate your financial knowledge now!

Thank you for your submission! Your download is ready. Access your free guide now:

Want to test drive The Money Vehicle Program for yourself? Click here to get the keys to log into the Money Vehicle Platform!

Thank you for contacting our support desk, we have migrated to a new platform to better serve you. In order to properly assist you, please click the email address or send an email to Please ensure to include the following:


  1. Full Contact Information
  2. Details on the issue you are encountering
  3. Best time to contact you in the event a phone call is required.


Thank you,
YMV Support Team

Contact Us