I’ve said for some time that college planning is hard. I discovered this the hard way, through my own situation.

Both of my daughters are in college now, and I started 529 accounts for each of them the year they were born. I got a little tax deduction and the benefit of tax-free growth.

When my older daughter was a freshman in high school, I realized the problem: even though she was starting college in three years, I had no idea whether she would go to Mizzou or Harvard. I’d be proud either way, but there’s a $50k per year cost difference.

At that point, I was way overfunded for Mizzou and pretty underfunded for Harvard. I knew that I could solve the underfunding problem by using some of my salary and borrowing money if needed.

The overfunding was trickier. Yes, I could transfer any unused balance from my older daughter to my younger daughter, but I had the same over/under funding problem with her and even less information about where she might be headed.

As a result, I stopped funding the 529 plans, tried to set aside saving outside of the plan, and perhaps most importantly, told them they couldn’t go to Harvard or anywhere else over a certain dollar limit. (My parents didn’t give me a budget, and the school I went to was perfectly fine, but at $70k per year, I don’t think I spent their money well).

I didn’t want to end up with unused 529 balances because not only would I have to pay tax on the withdrawal, but a 10 percent penalty for not spending the money on education.

The Secure Act 2.0 creates a solution for this problem, by allowing unused balances to be deposited into Roth IRAs for the kids. As soon as I heard that, I regretted ending contributions, but after looking at the rules that go along with this transfer, I’m fine with my decision (especially not knowing what the new law would be).

There are a lot of rules to convert, and I won’t cover them all, but here are the biggies:

1. The 529 account has to be opened for at least 15 years.
2. The dollar amount that you want to convert has to have been in the plan for five years.
3. The beneficiary of the 529 has to be the Roth owner.
4. At the time of the conversion, the beneficiary has to have earned income, just like they would with a Roth IRA.
5. Conversions can’t exceed the annual deposit limit of $7k, which means that converting $35k will take five years.

There are a number of open questions that the government has yet to answer. For example, if I transfer $5k from my older to younger daughter, does the five-year (or 15-year) clock start with the initial deposit or with the transfer?

I’ve kicked around the idea of starting 529 contributions again, with the idea of intentionally overfunding for the purpose of a Roth conversion.

My conclusion is that it probably isn’t worth overfunding. If I’m giving them extra money beyond tuition, I could just make a regular annual gift and have them contribute the money to a Roth.

The only reason that I would need to go ‘through’ the 529 is to avoid the Roth income limitation. If she graduates and earns $155k right out of the gate, then she won’t be able to make a Roth contribution, but we could have done a 529 conversion. I don’t think this is much of a risk for most college kids.

The purpose of the law was to get parents to contribute. Surveys showed that one of the primary reasons that parents didn’t start 529 plan accounts was the fear over overfunding them, and this resolves that issue.

Naturally, I’m always looking for a clever planning idea, so if I’ve missed something, let me know. In this case, my conclusion is that the conversion is a good backup plan for excess savings, but not a secret saving strategy that gets you something special.