There is one other consideration when determining whether to include the 1099-Q on the tax return for the recipient/beneficiary in connection with the 529 Rollover to Roth treatment: How that connects to the Credit for Qualified Retirement Savings. We rolled over funds left in our older son's 529 to his Roth and he received a 1099-Q (all properly completed by Virginia529). However, this amount should be considered a Roth contribution, which permits him to do the calculation for the Savers Credit (he finished college years ago). As long as you treat this as a rollover in TurboTax, the earnings reflected on the 1099-Q are not taxable and the Savers Credit can use this amount for the calculation. If you decide not to enter the 1099-Q, you lose the option of showing the Roth contribution when calculating the Savers Credit.
