529 to Roth Rollover

Forum|Forum|1 year ago
January 23, 2025
2 replies
0 views

I met the requirements to do a 529 to Roth rollover in 2024 and moved $7000. I see the 529 plan issued a 1099-Q for this transfer to the Roth account owner. The only difference I note between this 1099-Q and the "normal" 1099-Q used to pay college expenses is that Roth rollover one has Box 4 "Trustee-to-trustee" transfer checked. Does the Roth account owner have to report the 1099-Q? And if so, how does Turbo tax know not to add the earnings amount to their taxable earnings?

MayaD

Alumni - Intuit

If distributions from the 529 plan are not taxable, do not enter the 1099-Q forms.

For calendar years beginning after 2023, 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 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 take a withdrawal for themselves and then send the money to a Roth IRA account

my529

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

JFW3Author

Level 4

Just not inputting the 1099-Q will work, but there is a certain hesitation to simply not input a validly issued tax form into Turbotax. It would be better to input the 1099-Q and then proactively indicate (assuming it meets the criteria) that it is a qualified 529 to Roth Rollover. Better procedure and better documentation. All they need to do check that the trustee-to-trustee transfer box is checked and then allow users to indicate whether it was a qualified 529 to Roth Rollover. If so, then the earnings amount would not be taxable.

KrisD15

Level 15

I'm in a similar situation but more complex. I have a 529 plan for my daughter. I get all the reimbursements and the tax forms. She set up a Roth IRA in 2024. I did a trust-to-trust transfer with Fidelity. However, they didn't get it done until January 2025, put they said it will be qualified for 2024. A couple of questions: What do I report on my tax return and what does my daughter report on hers. Assuming the transfer made it on time in 2024 and also, in 2025 (for 2024 contribution). Right now I tentatively put there was a contribution for Roth IRA on her return that was made before the tax filing deadline (but no mentioned where the funds came from). I think would be OK for her. But for me, what do I have to do on my tax return. Thanks for any insight!

This was answered on your other posted question

Nothing needs to be entered into the program.

According to the IRS:

“A Roth IRA for the benefit of the same beneficiary, if the distribution is a direct trustee-to-trustee transfer from a QTP account that has been open for more than 15 years and the amount distributed does not exceed total contributions (and attributable earnings) made to the QTP more than 5 years before the distribution date. However, this doesn't apply to the extent the amount distributed when added to other amounts contributed to Roth IRAs exceeds the annual contribution limit. For more information about contributions to Roth IRAs, see Pub. 590-A.”

“Don't report qualifying rollovers (those that meet the above criteria) anywhere on Form 1040, 1040-SR, or 1040-NR. These aren't taxable distributions.”

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"