New Ways to Use 529 Plans

When Congress established 529 plans in the 1990s, they were designed as a tax-advantaged tool to save for college.

Contributions to these investment accounts grow tax-deferred, and you can withdraw funds tax-free for qualified college expenses, such as tuition, room and board, computers, and books. Most states and Washington, D.C., also offer a tax deduction or credit for residents who contribute to their state's plan.

Over the years, tax-free uses for 529 funds have expanded to include some other educational costs, too, including apprenticeship programs and tuition for kindergarten through 12th-grade schooling. The One Big Beautiful Bill Act, signed into law over the summer, has further extended the ways you can use 529 money, including a wider range of postsecondary educational programs.

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What's covered by 529 plans now

Under the new rules, you can now withdraw 529 funds tax-free for tuition, books and other fees associated with qualifying non-degree credential programs, including for plumbing, electrical work, HVAC and welding.

Programs listed under the Workforce Innovation and Opportunity Act generally qualify; you can look up your state's directory of WIOA-eligible programs on CareerOneStop, the U.S. Department of Labor's career, training and job-search website. You can also check for eligible programs in the Web Enabled Approval Management System (WEAMS), maintained by the Department of Veterans Affairs.

Additionally, withdrawals from a 529 are tax-free for certification and licensing expenses and for continuing education required to maintain those licenses. For example, you may use funds to prepare for and take exams required to practice law or become a certified public accountant. Professionals such as teachers, nurses and real estate agents may use 529 money for continuing education to retain their licenses or certification.

If you've been saving money in a 529 for your child, these new rules broaden the options for how they can spend the funds. Or, if you need to take continuing-education courses for your current job or want to learn new skills for a career pivot, you could benefit, too, says Mary Morris, CEO of Commonwealth Savers, Virginia's program for tax-advantaged education savings.

You can change a 529 plan's beneficiary to another member of the family. So if your child doesn't need all the money in their account — say, because their educational expenses were lower than expected — you could switch the beneficiary to yourself and use the funds for your own education.

Note that provisions in the Big Beautiful Bill Act also let families use up to $20,000 per year for elementary and secondary school tuition, course materials, tutoring, fees for standardized tests, and more. Previously, qualified withdrawals of 529 money for K-12 students were limited to tuition, up to $10,000 annually. (The $20,000 limit starts in 2026.)

Not all states have altered their rules to follow the federal government's expanded uses for 529s, so make sure to check your state's policies.

The Roth option for 529s

Keep in mind that thanks to the SECURE 2.0 Act, passed in 2022, there's another way to put leftover 529 money to good use. You can roll over the funds, up to a $35,000 lifetime maximum, into the 529 beneficiary's Roth IRA, tax- and penalty-free.

Rollovers must be within the annual Roth contribution limit, which is $7,000 in 2025 and $7,500 for 2026. The 529 plan must have been maintained for the beneficiary for at least 15 years before you can do the rollover.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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