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SC Information Letter #24-4
South Carolina Department of Revenue
South Carolina Department of Revenue
Abstract
If the funds in a 529 account are not used for qualified educational expenses, any nonqualified withdrawals may incur a 10% federal penalty and any investment gains may be subject to income tax. According to the Internal Revenue Code, if the beneficiary of the 529 plan has not exhausted all funds in the 529 account, withdrawal of the remaining funds is a nonqualified withdrawal and penalties and taxes will typically apply. However, as part of the SECURE 2.0 Act passed in 2022, Congress provided that after January 1, 2024, any funds remaining in a 529 account can be rolled into a Roth IRA without tax or penalty, subject to certain qualifications.
Issue Date
2024-04-11
Keywords
South Carolina Department of Revenue--Periodicals, Interest rates--South Carolina, Taxation--South Carolina, Revenue--South Carolina
Type
Text
Rights
Records, documents, and information made available by the agencies of the South Carolina state government or its subdivisions are made accessible through the South Carolina State Library Depository and are protected under U.S. Copyright law (Title 17, U.S.C.) and South Carolina state law (Title 30 and 60, S.C.C.L.). Distribution rights are determined by the agency or author and users should contact the aforementioned for more information.
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