What Is 529 Contribution Limit For 2024. Contributions made to a 529 plan can be deducted from state taxable income up to a certain yearly limit. Currently, a 529 plan withdrawal for anything other than qualified education expenses may be subject to income tax and a 10% penalty.
Furthering our above example, if you have $35,000 in unused funds in a 529 account, that would cost you $3,500 in penalties before even considering the taxes. And starting in 2024, you’ll be able to convert up to a lifetime limit of $35,000 in a 529 to a roth ira owned by the 529 beneficiary for at least 15 years, subject to annual roth.
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