Parents across Illinois have a new reason to heave a sigh of relief when it comes to their children's education funds. The state’s law now concedes to a smart shift in financial planning—a rollover of unused 529 college savings into Roth IRAs, as per illinois.gov. Illinois State Treasurer Michael Frerichs' played a key role in this update, aiming to give the parents a backup plan for their children's future, whether it's in higher education or securing a retirement nest egg.

"This will give parents another option when deciding what to do with the money they've saved for their children if they don't use all of it," Frerichs stated, expressing gratitude towards Gov. JB Pritzker who signed the bill into law. Additionally, the Illinois Treasurer commended State Sen. Steve Stadelman and State Rep. Diane Blair-Sherlock for sponsoring the legislation. The adjustment follows a federal measure approved by Congress in December 2022, which changed Section 529 of the Internal Revenue Code to permit these tax and penalty-free rollovers.

According to illinois.gov, the state required legislative changes to allow Roth IRA rollover options for Bright Start and Bright Directions 529 college savings account owners. This modification is anticipated to aid families that have been diligently saving for their child’s college, only to find out their child has chosen a different path or has been awarded scholarships.

"We worked together to approve this common-sense change that will help families who open college savings accounts for their child," Stadelman, a representative of the Rockford area, stated by illinois.gov. Echoing this sentiment, Blair-Sherlock from Villa Park  said, "We are pleased to be able to tell families who are responsibly saving for their children's future education that any unused funds can now be used to help start saving for their child's retirement without penalty."