For distributions after December 31, 2023, a qualifying 529-to-Roth rollover must go directly between trustees to the beneficiary’s Roth IRA. The 529 account must have been open at least 15 years. Recent contributions and their earnings within the five-year lookback are excluded, and qualifying rollovers have a $35,000 lifetime ceiling.
The transfer also uses the beneficiary’s annual IRA contribution allowance, reduced by other IRA contributions. The compensation limit still applies; the usual Roth income phaseout does not. Check the eligible balance, compensation and other contributions before treating the transfer as tax-free.
A software warning alone does not establish the tax result. As a troubleshooting step, compare the transaction entry with Form 1099-Q and the trustee’s records. A possible entry error is an inference, not a confirmed software defect; do not override the warning without resolving the rules.
Primary sources
Topic no. 313, Qualified tuition programs (QTPs) | Internal Revenue Service
26 U.S.C. 529: qualified tuition program rollover