What do you mean by "indirect rollover"?
A direct rollover is when the money goes directly from the ESA to the 529 (Trustee to Trustee rollover). An indirect rollover is when you take the money out of the ESA (you have temporary possession of the money) and then later put it into a 529. To be valid, the indirect rollover must be completed within 60 days,
Q. Where would I indicate the indirect rollover to the 529?
A. You get a screen titled Distribution Transfer, which asks Was all or part of this distribution of $xxxx rollover to another qualified tuition program...... Check Yes and follow the interview.
Q. Do I need to report this on our joint return since, ultimately, the funds were used as qualified expenses for my spouse's student loans?
A. No. Not because it was used for loans, but because it was a proper rollover. After you go thru the TurboTax interview, it will enter nothing about distribution/rollover on the actual tax forms. But, it will produce a worksheet for your records.
If you didn't meet the 60 day requirement, you have a non qualified distribution. After you go thru the TT interview, TT will report the tax and penalty.
