QTP to Roth IRA transfer

[slamny]

I did a rollover from my 529 plan for my daughter in 2025 $2400, which is her earned income in summer. The rollover is a not taxable and qualified rollover. But TurboTax saying, "Our program has not updated to support this yet. What should I do?

[ThomasM125]

Can you clarify where you rolled the 529 plan money to? Normally it is rolled over to another 529 plan or to a ROTH IRA. In either case, it would not result in earned income to your daughter. How does your daughter have earned income, how is it associated with the 529 plan distribution? Earned income is for services rendered, like wages from a job.

[slamny]

With the new tax law. You are allowed to rollover to the beneificary Roth IRA from the 529 with the max of $7000 a year and max of $35000 life time from your 529 account. Since my daughter only had $2400 earned income, I can only rollover $2400 from the 529 to her Roth IRA. 

[KrisD15]

No, a rollover is not the same as a contribution. 
The entire amount of a 529 account, regardless of student income, can be rolled-over trustee to trustee. 

[slamny]

Part of the SECURE 2.0 Act, passed by Congress at the end of 2022.  Legislative changes may put some of these concerns to rest, as distributions from 529 accounts can now be used to give the same beneficiaries a retirement boost as well. Under certain conditions, you can roll over tax- and penalty-free up to a lifetime limit of $35,000 in a 529 to a Roth IRA opened by the 529 beneficiary.1 The 529 plan must have been maintained for the beneficiary for at least 15 years, subject to annual Roth IRA contribution limits.

[ETM]

Daughter's return is saying the same thing as of today March 17. Still waiting on the update before filing. Got some time, but time is running out.

[MarilynG1]

A qualified rollover from a 529 plan to a Roth IRA for a beneficiary does not need to be reported on the beneficiary's tax return.  She will receive a Form 5498 for her records and possibly also a 1099-R from the plan administrator to indicate the non-taxable rollover, which she will enter into her tax return.  Trying to indicate that from a 1099-Q entry may only show a taxable Roth contribution. 

Here's more info from IRS Pub. 970.

@ETM