529 to Roth IRA Rollover
I have a client who has a Roth IRA. Recently, her grandparents conducted a rollover of funds from a 529 in her name, to her Roth IRA. Does this limit my clients ability to make her own contribution into the Roth IRA for the same tax year as the 529-to-Roth rollover was conducted?
Permalink Submitted by Alan - IRA critic on Tue, 2025-10-14 14:37
Yes, the regular contribution limit for IRAs is reduced by the amount of the Roth rollover, and client needs to have earned income to support both the rollover and any regular Roth contributions. If MAGI is too high to qualify for a regular Roth contribution, it will not affect the Roth rollover.
After the Roth rollover, client will have to continue to track her Roth IRA basis. That basis is increased by the portion of the 529 attributed to 529 contributions, but not by the portion of the 529 attributed to gains. These amounts will be shown in Boxes 2 and 3 of the 1099Q issued to report the 529 to Roth rollover.