Retirement tax questions

Are you trying to report a rollover from a 529 plan to a Roth?  

If your rollover met all SECURE 2.0 Act requirements, it should not be taxed. If TurboTax is calculating a tax on your 529 converted to a Roth IRA, it is likely because you manually entered Form 1099-Q into the software, or because the transfer did not meet the strict IRS criteria for a qualified rollover.

Here are the 2025 tax regulations that must be met for this rollover to be tax-free:

• 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 exact same person.
• The rolled-over funds (and any associated earnings) must have been in the 529 account for at least 5 years.
• The beneficiary must have earned income in 2025 that is equal to or greater than the $7,000 converted.
• The conversion must have been a direct trustee-to-trustee transfer.
• The rollover cannot exceed the 2025 annual Roth IRA contribution limit ($7,000 if under age 50; $8,000 if 50 or older) and counts toward the $35,000 lifetime rollover limit per beneficiary.

If your conversion meets all of the requirement above, IRS Publication 970 says that this is a non-taxable event and should not be reported on your tax return. Entering the Form 1099-Q into TurboTax triggers the software to treat the earnings as a non-qualified, taxable distribution.

To stop the rollover from being taxed, you must delete the form in TurboTax:

1. Select Tax Tools from the left-hand menu.
2. Select Tools.
3. Select Delete a form in the pop-up window.
4. Locate Form 1099-Q on the list and select Delete next to it.
5. Confirm the deletion and select Continue with my return.
6. You must retain your Form 1099-Q and the Form 5498 you will receive from your Roth IRA custodian in your personal records in the event of an IRS inquiry.