Roll excess 529 contribution to another account

[legendhfwang]

I just realized I contributed $100 more than the $18000 annual 529 contribution limit in 2024 to my son's account. I thought I could roll the extra to my own 529 account opened at the same brokerage firm. When I was on the phone with this brokerage firm, they told me they just roll the $100 to my own 529 but won't specify this is for 2024 contribution. Does that address my issue? I just worry if they don't specify the roll is for 2024 contribution, I might still exceed the contribution limit. Thanks!

[BrittanyS]

Yes, the rollover can count towards your 2024 account if the remaining requirements are met for a 529 rollover.  For 529 contributions, the following items must be met for the contribution to count as not taxable.  See the information provided by my529 regarding rollovers:

• Account has been open for at least 15 years
• The my529 beneficiary and the Roth IRA owner are the same person
• The rollover doesn't exceed the Roth IRA owner's following contribution limits
  • Does not exceed the Roth IRA owner's earnings for the chosen year
  • Does not exceed applicable Roth IRA Contribution Limits
  • Does not exceed an aggregate rollover amount of $35,000
  • Does not exceed the total amount contributed to the 529 accounts before the five-year period prior to the rollover

For more information, see the link below:

• My529

[legendhfwang]

Thank you for your answer. But I am not asking whether I can roll the excess 100 from 529 to a Roth IRA. I am asking whether I can roll the excess 100 from a 529 account to my son to the 529 account opened to myself. Actually, I know I can roll the excess, but I wonder if I have to specify the roll was for 2024 contribution because my brokerage firm said I can't. If I can't, then how IRS knows the roll is for the excess contribution from 2024. 

[AmyC]

Yes, the excess on one account can be rolled into another provided it is not an excess as well. You will need to keep your records, log of call, dates of transfer, etc all together.

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your  carryover information, and proof of your basis in your various investments. You must keep tax records  from the time you purchase until sold/ loss used plus 3 years. It is very easy to lose track of disallowed losses, carryforwards,  and basis. This can be a digital or paper notebook.

[legendhfwang]

Thank you. In other words, I don't need to specify whether it is for 2024 and 2025 as long as I kept the record. Is my understanding correct?

[KrisD15]

Correct.

There is no limit to contributing to a 529 account, the 18,000 you are referring to is the annual gift exclusion. 

If you contributed 18,100 to your son's account but later moved 100 to an account for a different beneficiary, the 100 would not be applied to the gift limit, so there would be no reporting necessary.