529 to Roth IRA

Forum|Forum|1 year ago
March 10, 2025
2 replies
21 views

Client is part time college student, aside from working. He transferred $7,000 from a 529 to a Roth IRA. 1099-Q distribution of $7,000, 5498 Roth IRA contribution of $7,000. It is showing in Proseries as being taxed. How do I change this to be tax free?

ProSeries Professional

T

Terry53029

Intuit Community Champion

Did he meet all the rules to do that ? You don't report on tax return. Just keep 1099Q and 5498 for your records

The 529 account must be at least 15 years old
The Roth IRA must be in the same name as the 529 beneficiary
The amount to be rolled over must have been in the 529 account for at least five years
The rollover must be within Roth IRA annual contribution limits
The rollover must be a trustee-to-trustee transfer
He must have earned income at least the amount rolled over

O

Opfor77Author

Level 5

Yes, except for the earned income. I though that was done away with in 2024.

George4Tacks

Level 15

https://www.irs.gov/publications/p590a#en_US_2024_publink1000129982

Qualified tuition program rollover to a Roth IRA.

Beginning with distributions made after December 31, 2023, a beneficiary of a section 529 qualified tuition program is permitted to roll over a distribution from the section 529 account to a Roth IRA for the beneficiary if certain requirements are met.

The rollover must be paid through a direct trustee-to-trustee transfer to a Roth IRA maintained for the benefit of the beneficiary.
The rollover amount for a year cannot be more than the Roth IRA annual contributions limit, and all such rollovers for the individual’s lifetime cannot exceed $35,000.
The rollover must be from a section 529 account that has been open for more than 15 years.
The distribution cannot exceed the aggregate amount contributed to the program (and earnings attributed to the contributed amount) before the 5-year period ending on the date of the distribution.

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.

Income.

You must include in your gross income distributions from a traditional IRA that you would have had to include in income if you hadn’t converted them into a Roth IRA. These amounts are normally included in income on your return for the year that you converted them from a traditional IRA to a Roth IRA.

Answers are easy. Questions are hard!