Rollover from 529 to a roth ira

[Travis Buck]

I have 2 young kids and therefore have two 529 accounts.  Each has a fair amount of money in them. After doing some research on the flexibility of a 529 as compared to a roth, I have decided to open each kid a roth ira. After researching the subject I know I CANNOT roll over the 529 to the roth. If I did, I would pay income tax and 10% penalty.

QUESTION: If my kids took a $5500 distribution each (which is the max roth contribution, and less than the $10400 max allowed by the irs to NOT file an income tax return) would there be any penalties or taxes to be paid other than the 10% early withdrawal penalty?

[Colleen F.]

Your kids are dependents now I assume, then the withdrawal would go on your tax return if you dont file seperately for them. It is also complicated by who owns the 529. Taxes are on gains . You need a CPA familiar with your situation. Why do you want to move money they can use at 15 for education to money they can only access at 65? Isnt IRA contribution always from EARNED income.