529 Rollover to Roth - what tax year to report?

[ClarkCGA]

Hello - this year, I helped my daughter rollover some 529 funds to her Roth IRA in January 2025. She will not receive the 1099-Q form until long after the tax filing deadline. Therefore, my question is: does she need to report this rollover contribution on the 2024 tax return or 2025 tax return?

[MinhT1 · Accepted solution]

As the rollover occurred in 2025, your daughter will receive a 2025 1009-Q form only in 2026, and she'll report the rollover on her 2025 tax return.

[ClarkCGA]

Thank you. Follow up question - in the Turbotax 2024 tax return, my daughter was asked to report Roth IRA contributions if they are made by April 15, 2025. To clarify, the 529-to-Roth-IRA rollover happened in January 2025 for the tax year 2024.

Should she report the 529-to-Roth-IRA rollover here? Or ignore it on the 2024 tax return and wait to report it on the 2025 tax return?

[BrittanyS]

If the 529 Rollover to Roth were for the tax year 2024, it would be included in the 2024 tax year.  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 distributions would not be taxable if the following rules are met:

• 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. $ 7000- $8000( 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 my529 must be paid in a trustee-to-trustee transfer.  An account owner can't withdraw money for themselves and then transfer it to a Roth IRA account.

@ClarkCGA 

[ClarkCGA]

Thanks for the details. Since the contribution was made in Jan 2025, the 5498 form for the IRA contribution or 1099-Q form for the 529 distribution would not be available until after the April deadline. How should my daughter report it on TurboTax for the 2024 tax return? Or does she report it on the 2025 tax return, once we receive the forms?

[AmyC · Accepted solution]

1. For 2024, report the ROTH contribution.

2. The Q won't be reported. When it shows up, tuck the proof with it into the tax folder. Better yet, a financial notebook.

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.

[ClarkCGA]

My daughter reported the 529-to-Roth IRA rollover as a Roth IRA contribution in the 2024 tax return. Also, in the 2024 IRS Pub 590-A on page 44, it says, "A distribution made after December 31, 2024, and before April 15, 2025, that is rolled over to a Roth IRA by April 15, 2025, and designated for 2024 would be reported as a Roth IRA contribution for 2024." This confirms your earlier comment. Thank you!