529 Plan distribution/rollover to a Roth IRA

Forum|Forum|1 year ago
February 14, 2025
2 replies
22 views

Client rolled over $7,000 to a Roth from his MD 529 Plan. There were earning and basis as part of the distribution. The earnings should not be taxed or subject to the 10% penalty, but ProSeries 2024 is doing both at the moment.

How do I enter this transaction or report the non-taxability and penalty exemption?

ProSeries Professional

Best answer by George4Tacks

https://accountants.intuit.com/community/proseries-tax-discussions/discussion/trustee-to-trustee-transfer-form-1099-q/00/78586

https://accountants.intuit.com/community/lacerte-tax-discussions/discussion/1099-q-distribution-rolled-over-to-roth-ira/00/316428

If you are sure it is not taxable, which is probably correct, then do anything you can to make it not taxable.

T

Terry53029

Intuit Community Champion

Go to rollover information on the 1099R worksheet (about 2/3 way down) and check box "entire distribution rolled over" As long as it was under $35000

D

dsacpaAuthor

Level 3

Thanks, but there is NO Form 1099-R from the MD529 Plan. They received a Form 1099-Q referencing the $7,000 trustee-to-trustee transfer only.

I found that this is considered a qualified educational expense, so at the moment, I have the $7k as an other QEE. This allows the rollover to NOT be taxable and not subject to the penalty.

I'm wondering if this is the proper reporting in ProSeries and on the tax return???/

George4TacksAnswer

Level 15

https://accountants.intuit.com/community/proseries-tax-discussions/discussion/trustee-to-trustee-transfer-form-1099-q/00/78586

https://accountants.intuit.com/community/lacerte-tax-discussions/discussion/1099-q-distribution-rolled-over-to-roth-ira/00/316428

If you are sure it is not taxable, which is probably correct, then do anything you can to make it not taxable.

Answers are easy. Questions are hard!

S

speckonfire

Level 2

New 2025 1099Q has box 4b checked for 529 to Roth, but Proseries is causing the earnings to be taxable. Last year, trustee to trustee box was checked and earning was not taxable. There isn't anyway to show that the earnings are not taxable because the IRS conditions were met. I was told to wait until the update or ask the community

B

Brainstrom

Level 5

We pay high prices for ProSeries tax software and we are always waiting and holding onto tax returns until forms are finalized. This is unacceptable!!! and Frustrating!!!

T

Tamlyn67

Level 3

Any idea if this will be updated or do we just not input it into the federal return since it is not taxable

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