One important thing to consider is that the 15-year rule for 529 plans is based on when the account was opened, not how long you've been a beneficiary. So if you were added as a beneficiary to an existing 529 later, make sure to check when the account was actually established. I almost made this mistake with my cousin's 529 that I was added to - thought it was old enough but the account itself was only opened 12 years ago even though I'd been listed as a beneficiary for most of that time.

This is a great question and I'm glad to see so many detailed responses here! I went through a similar process last year and wanted to add one more consideration that helped me decide on the timing. Since you mentioned you're working full-time now, make sure to factor in your current year's income when planning the Roth conversion. The 529-to-Roth rollover counts toward your annual Roth IRA contribution limit ($7,000 for 2025 if you're under 50), so if you were already planning to make regular Roth contributions this year, you'll need to reduce those by whatever amount you roll over from the 529. Also, even though both rollovers can happen in the same tax year, I'd recommend completing the Coverdell-to-529 transfer first and waiting for it to fully settle before initiating the 529-to-Roth rollover. This just helps avoid any potential administrative confusion between the two financial institutions and ensures clean record-keeping for tax purposes. One last tip: keep detailed records of all the transaction dates and amounts. The IRS is still working out some of the reporting requirements for these newer 529-to-Roth rollovers, so having comprehensive documentation will be helpful when you file your taxes.

Just to add something nobody mentioned - check if your 401k plan allows for an in-service distribution. Some plans let you take money while still employed. Also, if you're 55 or older and leave your job, you can take penalty-free distributions from THAT employer's 401k (not IRAs or previous employers).

I understand your frustration with the plan restrictions. Since the CARES Act provisions expired in 2020, you're unfortunately stuck with the standard early withdrawal rules. One thing to clarify though - you can't "choose" to pay the 10% penalty if you don't actually qualify for it under CARES Act criteria, since those provisions no longer exist anyway. Any early withdrawal now would automatically be subject to the penalty unless you meet one of the standard exceptions. Before proceeding, I'd strongly recommend double-checking your plan documents about hardship withdrawals. Sometimes people think they don't qualify when they actually do - the criteria can be broader than expected (like preventing foreclosure, certain medical expenses, or funeral costs). Also verify if your plan truly doesn't offer loans, as this is pretty rare. If you absolutely need the money and don't qualify for any exceptions, then yes, you'll pay the 10% penalty plus full income tax in the year of withdrawal. Just make sure to set aside enough for the tax bill - it can be substantial depending on your tax bracket.

Perfect! If your last paystub shows the year-to-date totals and you didn't work there after July, then those YTD numbers ARE your annual totals for 2024 from that employer. You can absolutely use those to file Form 4852 (Substitute for Form W-2). Just make sure your paystub shows: - Total wages (Box 1 on W2) - Federal income tax withheld (Box 2) - Social Security wages and tax (Boxes 3 & 4) - Medicare wages and tax (Boxes 5 & 6) - Any state taxes withheld Form 4852 is specifically designed for situations like yours where you can't get your W2 but have the wage information from other sources. The IRS accepts this all the time. Just attach a copy of that final paystub to your return as supporting documentation. You've got this - no need to grovel to your old boss!

Great to see this thread helping so many people! Just wanted to add one more tip that saved me time when I was in a similar situation - if you're using TurboTax like the original poster mentioned, they actually have a feature that walks you through filling out Form 4852 step by step. When you get to the W-2 entry section, there's an option for "I don't have my W-2" and it guides you through the substitute form process. It even has fields that match up exactly with what's on your final paystub, so you don't have to figure out which numbers go where. Since you already have your account set up with them and they have your employer information from last year, it should make the whole process pretty seamless. Just make sure to keep a copy of that final paystub for your records in case the IRS ever asks for documentation later.

I'm a tax professional and wanted to add some important points to this discussion. First, you're correct that inheritances are generally not taxable income to the recipient, but the key word here is "generally." Since this cash wasn't formally documented as part of your grandfather's estate, you may need to treat it differently for tax purposes. The IRS looks at three main factors: 1) Was there donative intent by the deceased? 2) Was the property actually transferred? 3) Did the recipient accept it as a gift/inheritance? The verbal statements to your parents help establish intent, but you'll want to document this thoroughly. Also, keep in mind that while banks report cash deposits over $10k, they can also file Suspicious Activity Reports (SARs) for any transaction they find unusual, regardless of amount. Being prepared with proper documentation about the source will help avoid complications. I'd strongly recommend consulting with both a tax attorney and an estate attorney before making the deposit. The small cost upfront could save you significant issues later if the IRS has questions about the sudden appearance of this money in your accounts.

I work as a bank manager and wanted to share some insights from the banking side of things. When customers come in with large cash deposits like yours, we're actually very used to inheritance situations - you're not the first person to discover money after a loved one's passing! A few practical tips for when you're ready to make the deposit: 1) Call ahead and schedule an appointment specifically for a large cash deposit. This ensures we have adequate staff and time to handle it properly. 2) Bring any documentation you have - death certificate, family letters, photos of you and your grandfather together, anything that helps tell the story. 3) Be completely transparent about finding the money while going through his belongings. Honesty goes a long way in these situations. 4) Don't be surprised if the process takes 1-2 hours. We need to count everything multiple times and complete various forms, but this is normal procedure. The Currency Transaction Report (CTR) is automatic for deposits over $10k and isn't something to worry about - it's just a government requirement that we handle. What matters more is having a clear explanation of the source, which it sounds like you're working on getting documented properly. Most importantly, don't stress too much about the bank side of things. Focus on getting the legal and tax advice first, then the actual deposit process will be straightforward.

Stupid question maybe, but what exactly is backup withholding and how much do they take? I think I might have this issue too but never understood what it actually means.

Just wanted to add that timing is really important with B notices. The IRS gives banks specific instructions about when to start backup withholding, and while some banks are lenient (like in your case), others are very strict about the deadlines. Since you mentioned wanting to open a high-yield savings account soon, I'd recommend getting this fully resolved before you apply. Some banks will actually check if you have any outstanding B notice issues when you open new accounts, and having an unresolved notice could complicate the process. Also, make sure when you fill out the W9 that you include a brief note explaining that the SSN was corrected in your account on [date] and that you're responding to ensure proper tax reporting. This gives the bank's tax department context about why there was a delay in your response.