The wording on the 1099-Q is to convince the taxpayer to report the form. The IRS does not want extra forms to process. Therefore, IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered.
You are supposed to add the form to your tax files along with proof of the rollover, in case the IRS does ask. The IRS knows all the account balances in investments so they can see the movement from the 529 moved to the ROTH when the same social security number is attached to both accounts.
NOTE: Starting in 2024, the SECURE 2.0 Act allows unused 529 education savings plan funds to be rolled over into a Roth IRA for the beneficiary, subject to a $35,000 maximum lifetime limit per beneficiary. This provision helps address concerns about over-saving for college by allowing unused, tax-advantaged funds to be used for retirement.
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