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The Book

Slott clears the rollover clock and sets a 529-vs-Trump test

The Slott Report Mailbag gives advisors a straightforward rollover answer and a free-money-first framework for adding a Trump Account beside a 529 plan.

Ed Slott's latest Slott Report Mailbag takes up a rollover question that appears in client meetings more often than it should. The once-per-year rule, he wrote, applies only to rollovers from a traditional IRA to another traditional IRA and from a Roth IRA to another Roth IRA; money moving out of a 401(k) or another employer plan into an IRA is not subject to that limit, nor are rollovers from an IRA into an employer plan or conversions of traditional IRA money into a Roth IRA. The practical takeaway is clean: rolling plan money into an IRA does not trip the same-year clock that governs IRA-to-IRA transfers.

The second question is where the tax planning gets interesting: a reader asked whether a daughter should keep contributing to her son's 529 plan or open a Trump Account. Slott came down on the 529, and he noted that most financial advisors and commentators would as well, because a 529 accepts larger contributions, carries a state income-tax deduction in many states, and lets earnings come out tax-free for qualified higher-education spending. The catch is the use requirement: withdrawals for anything other than qualified education are taxed and penalized. That is the case for treating a 529 as the primary vehicle when the goal is known college costs.

Slott did not stop at the either-or, and that is the part advisors should hear: a Trump Account is still worth opening alongside the 529, he wrote, when the child is eligible for the $1,000 federal contribution — eligibility he pegged to children born between 2025 and 2028 — or when an employer or charity is contributing. Passing up that money would be a mistake. The answer treats the Trump Account as an add-on, not a replacement: keep the 529, and use the new account when the eligibility triggers are met.

The mechanics of employer contributions are not fully settled; this publication's earlier look at the proposed rules laid out how employers can contribute, and the fine print is still taking shape. As that rulemaking lands, the Trump Account's role in a client's college-savings plan could widen, but for now the client-ready line is Slott's own: check for free money first, then run the tax comparison.

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