529 to Roth conversion

Forum|Forum|1 year ago
March 21, 2025
3 replies
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I rollovered $7,000 from my 529 account to a Roth IRA on January 14, 2025. Does this apply to the 2024 or 2025 tax year? If the latter, this means I can still contribute to my 2024 tax year, correct? Thanks

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AnnetteB6

Level 15

Since the rollover was done in 2025, it should be a 2025 transaction which would not affect your 2024 Roth IRA contribution limits. You can still make your 2024 contribution if you are within the appropriate income limits to do so.

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YakmanAuthor

Level 2

AnnetteB6. Thank you for your prompt and helpful response. Appreciate it.

Hal_Al

Level 15

Q. I rollovered $7,000 from my 529 account to a Roth IRA on January 14, 2025. Does this apply to the 2024 or 2025 tax year?

A. 2025. You will receive a 2025 form 1099-Q early in 2026.

Be advised that there's currently a problem entering that in TurboTax (TT). Hopefully they'll have it fixed by next year. https://ttlc.intuit.com/community/college-education/discussion/mesp-money-directly-transferred-to-roth-for/01/3546500/highlight/false#M59940

YakmanAuthor

Level 2

Thank you Hal_Al. Appreciate your clear and prompt response.

YakmanAuthor

Level 2

I understand the 529 to Roth conversion does not result in any Federal taxes, as long as you meet criteria such as the length of time the account has been open etc. However, I live in California and the State deems the earned amount as taxable income in addition to levying a charge of 2.5%. For the $7000 rollover in January 2025, the principal/earnings split was $3000/$4000. As stated earlier, this is considered a 2025 IRA. Do I report the $4000 earnings to the California Franchise State Board in my 2024 or 2025 returns? Thanks