529 for everyone

The IRS What's New for 2023 section of Publication 590-A has a great summary. I've copied it below.

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Qualified tuition program rollover to a Roth IRA. Beginning with distributions made after December 31, 2023, a beneficiary of a section 529 qualified tuition program is permitted to roll over a distribution from the section 529 account to a Roth IRA for the beneficiary if certain requirements are met.

• The rollover must be paid through a trustee-to-trustee transfer.

• The rollover amount cannot be more than the Roth IRA annual contributions limit.

• The rollover must be from a section 529 account that has been open for more than 15 years.

The distribution is paid in a direct trustee-to-trustee transfer (rollover) to a Roth IRA maintained for the benefit of the designated beneficiary. The distribution cannot exceed the aggregate amount contributed to the program (and earnings attributed to the contributed amount) before the 5-year period ending on the date of the distribution. A distribution made after December 31, 2023, and before April 15, 2024, that is rolled over to a Roth IRA by April 15, 2024, and designated for 2023 would be reported as a Roth IRA contribution for 2023.

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The annual distribution from a 529 plan to a Roth IRA cannot exceed the normal Roth contribution limit for each year. (Currently $7,000 for 2024.) 

The lifetime maximum that can be moved from a 529 plan to a Roth IRA is $35,000.

The distribution from a 529 plan to a Roth IRA cannot be more than the contributions (plus earnings attributed to those contributions) made BEFORE five years preceding the date of the distribution.  In other words -- you can't move "recent" contributions from a 529 plan to a Roth IRA. The funds being moved have to be at least five years old. 

(Source for the details above are from the amended code in sub-section (c)(3)(E) of 26 U.S. Code § 529 - Qualified tuition programs -- currently only visible in the Notes section of that tab.)

Earnings on the amounts would be tax-free, yes. But the lifetime maximum of $35,000 may not make it much of a loophole for effective retirement savings.

Great question!

It indeed could be viewed as a loophole for getting money into a retirement type account.  However, remember, you can't get it out for 15 years without penalty.  

If your goal is purely retirement savings, a 401k via employer, SEP if self employed, or IRA year contributions is a better vehicle.