529 Rollover to Roth - what tax year to report?

Forum|Forum|1 year ago
February 25, 2025
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Hello - this year, I helped my daughter rollover some 529 funds to her Roth IRA in January 2025. She will not receive the 1099-Q form until long after the tax filing deadline. Therefore, my question is: does she need to report this rollover contribution on the 2024 tax return or 2025 tax return?

Best answer by MinhT1

As the rollover occurred in 2025, your daughter will receive a 2025 1009-Q form only in 2026, and she'll report the rollover on her 2025 tax return.

MinhT1Answer

As the rollover occurred in 2025, your daughter will receive a 2025 1009-Q form only in 2026, and she'll report the rollover on her 2025 tax return.

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ClarkCGAAuthor

Thank you. Follow up question - in the Turbotax 2024 tax return, my daughter was asked to report Roth IRA contributions if they are made by April 15, 2025. To clarify, the 529-to-Roth-IRA rollover happened in January 2025 for the tax year 2024.

Should she report the 529-to-Roth-IRA rollover here? Or ignore it on the 2024 tax return and wait to report it on the 2025 tax return?

BrittanyS

If the 529 Rollover to Roth were for the tax year 2024, it would be included in the 2024 tax year. 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 distributions would not be taxable if the following rules are met:

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 withdraw money for themselves and then transfer it to a Roth IRA account.