As an employer, you’re always looking for ways to attract and retain top talent while supporting your team’s financial well-being. One powerful benefit is a 529 education savings plan. With the recent SECURE Act 2.0, 529 plans have become even more flexible: 529 account holders can now roll over unused education savings into a Roth IRA for retirement.
What?!?
You read that right. After a certain time period, if someone doesn’t use their 529 funds, they can roll them into a retirement savings account.
By offering a 529 plan benefit through SavvyFi, you can help your employees prepare for both future education costs for themselves or their loved ones and their retirement. You can give them financial peace of mind at every stage of life.
Why 529 Plans Are a Valuable Employee Benefit
529 plans are tax-advantaged savings accounts designed to help families save for education. Contributions grow tax-free, and withdrawals for qualified education expenses (K-12 tuition, college, trade schools, and even student loan payments) are also tax-free. A list of qualified expenses is here. And now, unused 529 funds can be rolled over to Roth IRAs.
For employees, a 529 plan benefit means they can save efficiently for their children’s education—or even for their own continuing education. But what happens if they don’t use all the funds? That’s where the 529-to-Roth IRA rollover comes in.
How the 529-to-Roth IRA Rollover Works
The SECURE Act 2.0 introduced a game-changing new feature. Employees can now roll over up to $35,000 from a 529 plan into a Roth IRA, helping them transition unused education savings into retirement savings.
Here’s how it works:
The 529 plan must have been open for at least 15 years.
- Contributions (and earnings on those contributions) made in five years before the rollover aren’t eligible.
- Rollovers must go to the 529 beneficiary’s Roth IRA.
- They are subject to annual Roth IRA contribution limits ($7,000 in 2024, or $8,000 for employees aged 50+).
- Roth IRA income limits do not apply (for this type of contribution)
This new flexibility means employees no longer have to worry about “over-saving” in a 529. Instead, they can confidently contribute, knowing any leftover funds can help build their retirement savings.
What Could This Mean for Your Employees? Picture this:
Imagine a parent at your company opens a 529 account for their new Baby C. You help contribute to seeding the account. They continue adding to the account. Even if they leave your company, the 529 fund you seeded continues to grow.
Baby C graduates from high school and gets a full ride scholarship. Or decides to start her own business. Or works her ways through college and doesn’t use all the 529 funds.
Eventually, Baby C realizes she doesn’t need to use the 529 funds for education costs. Instead of taking a non-qualified withdrawal and paying penalties, she could roll this money into a Roth IRA over several years, maxing out contributions annually.
Say Baby C has $35k in her 529 account. She meets the criteria and starts using those funds to maximize her Roth IRA contribution. With the current $7k annual limit, she can maximize those contributions for 5 years.
Now Baby C has a leg up on an early start on retirement savings and can turn her attention to other short term savings goals. Maybe she’s eyeing a downpayment. Maybe she’s bootstrapping her own business.
The 529 plan account your employee opened for Baby C allows her the freedom to both save for retirement and thrive as she begins to build her career.
Amazing!
This early boost in retirement savings could give her significant tax-free growth while also allowing flexibility.
For your employees, this means less financial stress and more long-term security for their loved ones. For you, it’s a valuable benefit that supports both education and retirement savings goals—making your company stand out in a competitive job market.
How SavvyFi Makes It Easy for Employers
Offering a 529 plan through SavvyFi is one of the simplest ways to enhance your benefits package and support your employees’ financial well-being.
✔ No administrative burden – SavvyFi handles all the setup and management.
✔ Flexible employer matching – Offer incentives like contribution matching to increase participation.
✔ Education + Retirement in One – Employees can save for education with confidence, knowing they have a backup plan for retirement.
By adding a 529 plan benefit with SavvyFi, you’re showing employees that you care about their financial future—both now and decades down the road.
Why Now Is the Time to Act
Employees are looking for benefits that go beyond health insurance and 401(k)s. A 529 education savings benefit not only helps them reduce student debt but also supports long-term financial wellness. With the new 529-to-Roth IRA rollover option, there’s even more reason to make this a part of your benefits offering.
Ready to give your employees a smarter way to save? Let’s talk about bringing SavvyFi to your team.
Learn more about 529 plans and rollovers:
About SavvyFi: SavvyFi is a user-friendly fintech platform that makes it easy for employers to provide college savings and student loan benefits to their employees. Because the company’s platform is “zero-touch” to HR — without any complicated systems, integrations, or paperwork — SavvyFi unlocks education financing capabilities to even the smallest employers that would not otherwise be able to offer these benefits.
Disclosure: Third-party quotes shown may not be representative of the experience of all SavvyFi customers and do not represent a guarantee of future performance or success.
