A 529-to-Roth-IRA rollover allows you to move up to $35,000 of unused education savings into a retirement account without paying taxes or penalties, preserving the tax-advantaged status of the funds. In contrast, a nonqualified withdrawal means you take the cash out for noneducational purposes. With a nonqualified withdrawal, the earnings portion of the distribution is subject to ordinary income tax plus a 10% penalty, which can significantly reduce the value of your accumulated wealth.