By Ian Berger, JD
IRA Analyst

Question:

Can I roll over my pre-tax 401(k) funds to a traditional IRA and my Roth 401(k) funds to a Roth IRA? I am concerned about the once-per-year rollover rule.

Thanks,

Ken

Answer:

Hi Ken,

I have good news for you. The once-per-year rollover rule only applies to traditional IRA-to-traditional IRA and Roth IRA-to-Roth IRA rollovers. It does not apply to rollovers of 401(k) (or other plan) funds to a traditional or Roth IRA. (It also does not apply to rollovers from IRAs to plans or to conversions of traditional IRAs to Roth IRAs.)

Question:

Should my daughter continue contributing to her son’s 529 plan or open up a Trump account? I said she should focus on the 529 plan. Tax-free beats tax-deferred all day long. Am I right?

Craig

Answer:

Hi Craig,

Most financial advisors and commentators agree that if a parent’s (or grandparent’s) goal is to save for the child’s college, contributing to a 529 plan is likely a better option than a Trump account. Parents can contribute more to a 529 plan than they can to a Trump account and can take state tax deductions in many states. However, although 529 funds come out tax-free if used for higher education, taxes and penalties do apply if the funds are used for other purposes. Even if your daughter’s savings are going to a 529 plan, it is still worth opening a Trump account if her son is eligible for the $1,000 Federal government contribution (i.e., born between 2025 and 2028) or for contributions made by an employer or charity. Don’t pass up free money!

If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.

https://irahelp.com/should-my-daughter-continue-contributing-to-her-sons-529-plan-or-open-up-a-trump-account-todays-slott-report-mailbag/