How should I be reporting a 529 to Roth IRA direct rollover?

trvr-#r

I met all the requirements to execute a 529 to Roth IRA direct rollover, and rolled over only the allowed amount per the annual limits. My MAGI means I would not be able to typically contribute to the Roth IRA at all.

For the 529 rollover, how am I supposed to log this?

Vanguard shows this as a contribution, so I don't know whether or not to indicate it as a contribution with FTUSA. When I mark it as a contribution, I get this message: "Excess IRA contributions will cause a tax penalty. You can reduce or eliminate the penalty if you withdraw the excess contributions before timely filing your tax return."

KristineS

Hi trvrr

From the SECURE Act 2.0, you are allowed the rollover of 529 plan amounts to a Roth IRA, subject to the recipient's annual Roth IRA contribution amount. This is why Vanguard shows it as a contribution even though the term used is rollover. In 2024, for under age 50 the amount would be $7000 or the beneficiary's earned income.

Here is an article on the topic you may find helpful from a reliable source.

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