Hal_Al
Level 15

Education

Contact Fidelity. They should be able to return the excess contribution. It's a common thing. A 1099-R will be issued for the distribution.  Any earnings will be taxable. 

 

Q. What are my options to avoid paying taxes and 10% penalty as this would considered as non qualified distribution?

A. None. You had 60 days to put the money back into the 529 plan to classify it as a rollback/rollover and not a distribution. 

 

Q. I am still in school.  Can I use those funds for this years tuition?

A. No. Technically, the distribution year must match the  year the educational expenses were paid. See: https://ttlc.intuit.com/community/college-education/discussion/i-took-a-529-distribution-in-2021-for...

 

Q. But I am not sure how to report that in TurboTax (TT)/my Tax forms. 

A.  You enter the 1099-Q. Report the Roth rollover as a trustee to trustee rollover. That page in TT does not specifically mention Roth, but that is the entry point (they're working on a fix).. TT will report the remaining amount as a taxable distribution (a portion of the earnings, inbox 2, will be taxed and penalized).