Is the 1099-Q correct? QTP to Roth IRA checked, but Trustee-to-Trustee is not checked

[BK2000]

I made an eligible direct rollover from a 529 to a Roth IRA. All conditions were met for this to be tax free including the $ limit, 5-year rule and the funds went directly from the 529 to the Roth IRA.

Box 4 of the 1099-Q that my beneficiary daughter received has the QTP to Roth IRA box correctly checked, but above it, the box for Trustee-to-Trustee is not checked.

Q1: I am questioning if the Trustee-to-Trustee box should've been checked as well?

Q2: It is my understanding that since this is not a taxable event at the federal level, my beneficiary daughter should not bother entering this 1099-Q on her Federal tax return, is this correct?

Q3: Naturally since California views this as taxable, it needs to be entered on her State return, and ONLY the earnings portion of the distribution, correct?

TIA - I use Windows TurboTax Deluxe Desktop edition.

[user17697249456 · Accepted solution]

Q1:  My 1099-Q shows QTP to Roth IRA. Trustee-to-Trustee is only checked when the QTP is rolled over to another QTP plan. 

Q2: Correct. I was advised yesterday after posting the same question.  Re: 529 (California plan) Rollover to Roth

Q3:  Correct. Only the earnings portion should be reported. 

Hope this helps. 

[user17697249456]

Q1:  My 1099-Q shows QTP to Roth IRA. Trustee-to-Trustee is only checked when the QTP is rolled over to another QTP plan. 

Q2: Correct. I was advised yesterday after posting the same question.  Re: 529 (California plan) Rollover to Roth

Q3:  Correct. Only the earnings portion should be reported. 

Hope this helps. 

[rmistry11]

I have similar question as my parents did a Roll over to Roth from 529 funds as I do meet the criteria of 15 years and not going to use left over money. 

My 1099-Q shows Box 4 Type of Transfer : QTP to Roth IRA and Box 5 Distribution is from : B Checked for State QTP.

I understand now I do not need to file this for federal tax. I do have earnings.

Do I need to pay PA State tax on this earning?  if yes where I need to put that amount in PA Tax return. 

 Thanks for your response in advance.

[BK2000]

@rmistry11 wrote:

Do I need to pay PA State tax on this earning?  if yes where I need to put that amount in PA Tax return. 

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I encourage an expert knowledgeable with PA to respond to this. Until then, I just did a quick online search and found this:
"As of July 10, 2024, Pennsylvania does not tax qualified rollovers from a PA 529 account (QTP) to a Roth IRA, aligning with federal tax treatment."

Meaning you are home free! I suggest that you research it multiple times from multiple sources including your state authority just to be sure.

[BK2000]

Thank you @user17697249456 

The link you included also answered a followup question I had not asked - that there is no need to report it as a Roth contribution either.

[rmistry11]

@BK2000 - Thank you. I also found similar article on PA's site. I think I am good.