How can I exclude a 529-to-Roth IRA conversion from additional tax and from taxable income?

Forum|Forum|1 year ago
February 20, 2025
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See form 5329-T, under the "Additional Tax on Certain Distributions from Education Acts...." I can override line 6 but it is flagged as an error.

AmyC

Employee

A nontaxable transaction should not be entered. Please remove the form and keep it with your tax files.

Please verify your transaction is nontaxable.

IRS Publication 970, Tax Benefits for Education states:

Any amount distributed from a QTP isn't taxable if it's rolled over to:

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.

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