Why are the earnings portion of my 1099-Q considered taxable income for my 2024 529 plan rollover to a Roth IRA? 1099-Q data is correct.

Forum|Forum|1 year ago
January 31, 2025
1 reply
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1099-Q block 4 is checked as "Trustee-to-Trustee." Block 6 is left unchecked -- son is designated beneficiary. Rollover meets all IRS requirements.

KrisD15

If it was properly rolled-over, simply do not enter that 1099-Q.

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.”

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ricejosh2001Author

I agree to the extent that all eligibility requirements being met, receipt of proper 1099-Q, and non-taxable requirement. But, my hesitation is that Vanguard has sent the 1099-Q to the IRS and will trigger a flag in absence of clarifying details on my part.

I just wished that Turbo Tax would create the proper matrix to enable the ability to properly document the qualified distribution for those who share my concerns to allay any IRS red flags/audits. Turbo Tax should be able to create the updates to their software.

BTW, I have submitted a question to IRS for clarification. Hopefully, the IRS will respond... not holding my breath.

AmyC

Employee

The program must comply with IRS requirements. It is either reported and taxable or partially taxable or it is not reported. The IRS requires you to keep the form in your tax file.

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