Although a rollover from a QTP/ 529 to a Roth IRA that meets the Federal criteria is exempt from Federal tax, some states do tax the distribution. In PA, the PA legislature passed a bill to exempt rollovers made after July 10, 2024. My son's rollover was made (unfortunately) earlier in 2024, so is taxable in PA. However, by not having the rollover reflected when inputing information to the Federal
form, it may not be correct on the relevant State return. We used the only approach we could discern to input the 1099-Q information correctly reflecting a Trustee- to-Trustee transfer, but not have it be categorized as a taxable distribution by answering the only related questions affirmatively, i.e., that it was a transfer to another QTP (as others have noted, TurboTax does not currently include an option to designate the Trustee-to-Trustee Transfer as from a QTP to a Roth IRA). Although this omits it as taxable income from the Federal return, this automatically characterizes it as exempt on the state return as well, which for some states (or situations as in the case of a rollover in 2024 made prior to July 10th for PA residents) will be incorrect. Any suggested strategy for reconciling these in TurboTax (am using the Premier version for my and my son's returns) to not have it reflected on the Federal return but added to the State return when appropriate?
