Common questions about 1099-Q and 529 plans in Lacerte

New in tax year 2024 distributions made after December 31, 2023, a beneficiary of a section 529 qualified tuition program is permitted to roll over a distribution from a section 529 account into a Roth IRA for the beneficiary if certain requirements are met. See IRS Pub. 590-A for more information.

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1099-Q Calculation Worksheet

To view the QTB Distribution worksheet:

• Select the Forms tab
• Select Worksheets
• Locate the QTP Distribution Worksheet
• Select Print Form in the upper-right of the form (if needed)

Worksheets are not e-filed with the return. To include the QTP Distribution Worksheet, print the form to PDF and attach to the return via Screen 4.4, e-file Miscellaneous. For steps to attach a PDF, please read Attaching PDF Documents to a 1040 Return.

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Excluding a Portion of a 1099-Q Education Distribution Amount from the Additional 10% Tax Penalty

To exclude all or a portion of a distribution of education distributions from a 1099-Q, enter the amount to exclude from the 10% penalty in Screen 14.3, Education Distributions, in Amount excluded from 10% tax.

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How to report rolling over a qualified 529 plan to a Roth IRA and the resulting CA adjustments

New beginning tax year 2024, distributions made after December 31, 2023, a beneficiary of a section 529 qualified tuition program is permitted to roll over a distribution from a section 529 account into a Roth IRA for the beneficiary if certain requirements are met. See IRS Pub. 590-A for more information.

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To enter this distributions

• Go to screen 14.3 Education Distributions.
• Enter the Payer information from the 1099-Q.
• In the 1099-Q section enter lines 1-5. For line 4 enter a 1 for nontaxable.
• For CA filers, CA does not conform to the federal rule and requires an adjustment to be made.
  • Enter the addback amount on Screen 51.011 California Modifications on the Qualified IRC 529 tuition plan rollover to Roth IRA line.
  • If additional tax is applicable enter the amount subject to CA Additional Tax on Screen 54.011 California Taxes in the Qualified IRC 529 Tuition Plan Rollover to Roth IRA Subject to Additional Tax line.

Coverdell Education Contributions and Distributions

There is no input for contributions to Coverdell Educational Accounts. These contributions have no effect on the tax return.

To enter Coverdell educational distributions (1099-Q):

• Go to Screen 14.3, Educational Distributions.
• Enter the amounts in the Educational Distributions (1099-Q) section under the Form 1099-Q subsection

Qualified Expense input is required in the Qualified Expenses subsection in order to show distributions as nontaxable.

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Arizona - Contributions to a 529 College Savings Plans

• Go to Screen 51, Modifications (State & Local).
• Select Arizona Modifications from the left navigation panel (this will take you to Screen 51.101, Arizona Modifications).
• Scroll down to Arizona Subtractions section.
• Enter the appropriate amount in the field Contributions to 529 college savings plan.

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Arkansas - Brighter Future Fund Plan (529 Plan)

Contributions to the Arkansas Tax Deferred Tuition Savings Program can be shown on Forms AR1000ADJ or Form AR1000-CO. The input for this is in two different areas in the detail tab.

If you have made contribution to the Arkansas Tax Deferred Tuition Savings Program:

• Go into Screen 50.351, Arkansas Income.
• Scroll to the section Arkansas Adjustments (AR1000ADJ).
• Enter the amount into the field Arkansas program contributions.

If you wish to contribute a portion or all of your overpayment/refund to an Arkansas Tax Deferred Tuition Savings Program:

• Go into Screen 56.351, Arkansas Contributions.
• Scroll to the section Arkansas Brighter Future Fund Plan.
• Enter the Account Number and Total Contributions. These will show on form AR1000-CO and flow on to form AR1000F.

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Connecticut - Higher Education Trust (CHET) 529 Contributions

• Navigate to Screen 51.211, Connecticut (Schedule 1)
• Scroll to the Connecticut Subtractions section.
• Under the sub section CT Higher Education Trust (Chet):
  • Account Number - Enter your CHET account #.
  • Contribution - Enter the amount of your CT Higher Education Trust (CHET) contribution made for the taxable year.

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Iowa - College Savings or Advisor 529 Plan

• On the Detail tab, go Screen 51, Modifications.
• Under St. Mod. on the left panel, select Iowa Screen 51.341.
• Select Iowa Adjustments in the Section list.
• In Other Adjustment Type table, select College Saving Plan
• In Other Adjustment Amount, enter the applicable amount

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Missouri - Contributions to a Qualified 529 College Savings

• Go to Screen 51, Modifications.
• Under the St. Mod. section of the left hand navigation, select Missouri.
• In the Section list, select Missouri Subtractions.
• In the field Exempt contributions made to a qualified 529 plan (max contributions - $8,000 for single, $16,000 for married filing combined), enter the amount of annual contributions made to the Missouri Savings for Tuition Program to print on Form MO-A.

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New York - 529 Contributions are not displayed in the New York column

Per the instructions for Form IT-225, nonresidents of New York filing Form IT-203 should place the deduction for 529 contributions in the federal column only. Part-year residents filing Form IT-203 should place the amount contributed while a resident into the state column. The 529 plan contribution instructions for Form IT-225 say:

• S-103 New York's 529 college savings program deduction
• Form IT-201 filers: Enter the subtraction modification on line 30 of Form IT-201, as applicable. See the instructions for Form IT-201. Do not enter this code on form IT-225
• Form IT-203 filers: If in 2023 you, as an account owner, made contributions to one or more tuition savings accounts established under New York's 529 college savings program, then enter that amount, up to $5,000 for an individual, head of household, qualifying surviving spouse, or up to $10,000 for married taxpayers filing a joint return in the Total amount column only.
• Part-year resident individuals only: Also enter in the New York State allocated amount column any such contributions to a New York's 529 college savings program you made while you were a resident of New York state

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