Notice 2024-23: Special relief for certain rollovers to or from Maryland prepaid college trust accounts
Relief from 12-month limitation for taxpayers making rollovers to or from Maryland prepaid college trust for taxpayers affected by system issues
The IRS today released Notice 2024-23 [PDF 86 KB] announcing relief from the 12-month limitation for taxpayers making rollovers to or from the Maryland prepaid college trust (MPCT), a qualified tuition program within the meaning of section 529, for taxpayers affected by recent system issues.
As described in a related IRS release—IR-2024-20 (January 25, 2024)—federal tax law generally only allows one tax-free rollover in a 12-month period from one qualified tuition program to another for the benefit of the same beneficiary. Notice 2024-23 provides that the 12-month limitation for taxpayers making such rollovers will not be asserted by the IRS provided the rollover in question meets the following criteria:
- The taxpayer makes a rollover to or from the designated beneficiary’s MPCT account before January 1, 2025.
- The 12-month limitation would otherwise apply to the rollover to or from the MPCT account.
- The rollover was preceded by a qualified rollover from that same designated beneficiary’s MPCT account after December 31, 2021.
If a taxpayer eligible for the relief described in Notice 2024-23 receives a Form 1099-Q that includes a distribution that is treated as a qualified rollover under Notice 2024-23, then the amount corresponding to the qualified rollover is not includible in gross income, and the taxpayer is not required to report the amount on the taxpayer’s tax return.
Taxpayers eligible for relief under Notice 2024-23 are not required to file Form 5329, Additional Taxes on Qualified Plans (including IRAs) and Other Tax-Favored Accounts, for such a distribution and the 10% addition to tax does not apply.