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

trvrr
trvrr Member Posts: 1 Newcomer
in Filing my taxes

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."

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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 246

    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.

    Please log in to your FreeTaxUSA so our Support agents can better assist you.

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