For 2024, my parents rolled over over $7,000 from an eligible 529 plan to my Roth IRA. These are not subject to income limits, but TurboTax says I contributed too much.

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.

Thank you @SabrinaD2 .

I know that all of $7,000 transfer qualifies for the tax free treatment per the above. When you say "adjust the amount reported", are you referring to what I enter in the "Traditional and Roth IRA Contributions" in TurboTax? If so, I believe I'd need to enter $0 in my case.

Yes, you're correct.

• If the $7,000 transfer is the only contribution to your Roth IRA for 2024, you would enter $7,000 in the appropriate section of TurboTax. If you have made no other contributions, you wouldn't need to adjust further.
• However, if you have made additional contributions, you need to ensure the total of all contributions, including the 529 from you parents plus any you contributed does not exceed the annual limit of $7,000 (or $8,000 if you're 50 or older).
• If entering $0 in the "Traditional and Roth IRA Contributions" section is appropriate because the transfer is already accounted for, then you should follow that approach.
• Also be sure the your parent's financial institution transferred the funds directly to the institution managing your Roth IRA. This ensures that the funds do not pass through your hands, following the trustee-to-trustee transfer rule

Reach back out if something else is needed.