We recently received a notification from Microsoft 365 that all legacy Authentication methods for MFA and SSPR need to be migrated to Azure AD Authentication Methods policy by September 2024.
Microsoft provided step by step instructions, but we always ended up with an error message when attempting to complete the migration:
Couldn’t save the new migration state: You cannot move to migration complete until disabling all methods in the legacy MFA and SSPR policies.

Microsoft’s instructions stated that all legacy SSPR and MFA authentications must be disabled, before moving to the 3rd and final step of the migration.

However, even though we had disabled all legacy methods, the error message persisted.

After raising a support ticket with Microsoft 365 support, we found out that the App Passwords policy must also be disabled before the migration can be completed.

This finally allowed us to complete the Authentication methods migration in Azure AD.

Ralph says:
One also needs to deselect (untick) “Verification code from mobile app or hardware token” & save before migration can be completed.
Your image shows it ticked
RunTimeAsiaAdmin says:
Great catch, thanks Ralph. We’ll add some explanatory text below the misleading image.