"States differ in their treatment of 529-to-Roth IRA rollovers.... Most states with state income taxes have said they will follow federal law.... 7 states (and the District of Columbia) have indicated that 529 savers may be subject to state income tax 'recapture' if 529 funds are transferred to Roth IRAs.... California stands alone.Its residents who do a 529-to-IRA rollover will be subject to both state income tax and an additional 2.5% California tax on earnings."  MORE >>