If TurboTax indicates an excess contribution, you may need to adjust the amount reported based on the following:
For calendar years beginning after 2023, funds from an established 529 account can be transferred tax-free and penalty-free to a Roth IRA for the beneficiary of the 529 account.
- The 529 account must have been open for at least 15 years.
- The beneficiary of the 529 account and the owner of the Roth IRA must be the same person.
- The amount of the rollover is limited:
- Annual rollovers are subject to applicable Roth IRA contribution limits: $7,000 if under 50, $8,000 if 50 or older.
- Rollover amounts from all 529 plan accounts may not exceed $35,000 (lifetime limit).
- The money transferred must have been in the account for at least five years, and the amount can’t exceed your balance from five years prior.
- A Roth rollover from a 529 plan must be paid in a trustee-to-trustee transfer. An account owner can't take a withdrawal for themselves and then send the money to a Roth IRA account.
After double-checking all requirements are met, reach back out if additional assistance is needed.
For more detailed information, you can visit the Fidelity page on 529 rollovers to Roth IRA and the Saving for College guide on 529 to Roth IRA rollovers
See the original post here.
