Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Updated July 31, 2026. Quick answer: federal law made 529-to-Roth rollovers tax-free; your state may not have. The failures come in two distinct flavors. Nonconformity states tax the rollover as if it were a nonqualified withdrawal: California — verified against the FTB’s own Form 3805P instructions — taxes the earnings portion AND adds a 2.5% additional state tax. Recapture states gave you a deduction when you contributed and claw it back when dollars leave for a non-education purpose — whether a 529-to-Roth rollover triggers that recapture depends on how each state classified it, and states are still updating their answers.
Whether your state gives you anything at all
Five questions decide it, and most people only ask the first — deduction or credit, own-state plan or any plan, whose contribution counts, carryforward, and what triggers recapture. There is no federal deduction for 529 contributions; every break is a state one.
Federal-free and state-taxed is a real combination.
Whether YOUR state conforms is checkable in one adviser conversation. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide is paid when you submit the form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here — you stay on this page.
What happens when you press the button
It asks about nine questions — age, investable assets, location — then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
How to check your state without guessing
Ask two questions of your state’s plan (the administrator’s FAQ usually answers both): Does my state treat a 529-to-Roth rollover as a qualified distribution for state income tax? and Does it trigger recapture of my past deductions? A no on the first costs you state tax on earnings (California’s pattern); a yes on the second costs you the deductions you took (the pattern in several deduction states). Neither changes the federal treatment — you can owe a state hundreds while owing the IRS nothing.
If your state taxes the rollover, run the alternative first: changing the beneficiary moves the money inside the 529 world with no state event at all. The state-by-state vocabulary this site already maintains for the mirror problem — Roth conversions — lives at Roth conversion taxes by state.
More Retirement Taxes & Moving States guides: see the full 287-page index.