New Flexibility for 529 Plans: What the Latest Rules Mean for Your Savings

Introduction

If you’ve been using or considering a 529 plan to save for college, there’s good news: 529 plans 2025 have become more flexible than ever. New updates now allow families to use these savings for a wider range of educational and career-related expenses — far beyond traditional college tuition. In this blog, we’ll break down the new rules, what changed, and how you can make the most of your 529 funds.

What Has Changed with 529 Plans

Expanded Use for Vocational, Licensing & Credentialing Programs

Traditionally, 529 funds covered college tuition, books, room, and board.
Recent updates now allow 529 plans to be used tax-free for non-degree credential programs under the Workforce Innovation and Opportunity Act (WIOA). This includes vocational training, trade schools such as HVAC, plumbing, welding, and certification or licensing programs — including tuition, books, equipment, and exam fees.

Expanded Support for K–12 and Private School Tuition

Beginning in 2026, families will be able to withdraw up to $20,000 per beneficiary annually for K–12 tuition — double the previous $10,000 limit.
This makes 529 plans more practical for private school or other pre-college educational expenses.

New Option: Rollover to a Roth IRA

Thanks to the SECURE 2.0 Act, leftover 529 funds can now be rolled into a Roth IRA.
Up to $35,000 (lifetime limit) can be transferred if the account is at least 15 years old and meets contribution timing rules.
This offers a powerful second use for unused education savings — turning them into tax-free retirement funds instead of facing penalties.

More Beneficiary Flexibility

Families now have even greater freedom to reassign the beneficiary without tax penalties.
If the original beneficiary earns scholarships, skips college, or doesn’t need the full amount, funds can be easily transferred to another qualifying family member.

Why the Changes Matter — and Who Benefits

• Families pursuing trade or vocational careers

• Parents with children in private schools or alternative education

• Savers with leftover 529 funds they want to repurpose

• Families planning for multiple children or multi-generation education

These changes make 529 plans far more adaptable, allowing families to support diverse educational and career paths, while still maximizing tax advantages.

Important Considerations

• State rules may differ from federal rules, so check your state’s 529 plan guidelines.

• Roth IRA rollovers require the 529 account to be open for at least 15 years, and certain contributions must meet timing rules.

• Annual and lifetime limits apply for tuition withdrawals and rollovers.

• Keep receipts and documentation for all educational expenses to ensure they qualify.

How to Maximize the New 529 Plan Benefits

1. Review your beneficiary setup and update if needed.

2. Plan ahead for vocational training, certifications, or licensing programs.

3. Consider future Roth IRA rollovers if traditional college is unlikely.

4. Use the increased K–12 tuition limit strategically.

5. Double-check your state’s rules before making withdrawals.

Conclusion

The new 2025 updates to 529 plans open the door to more opportunities and flexibility than ever before. Whether you’re preparing for college, trade school, licensing programs, private school tuition, or even retirement savings, the expanded 529 plan rules help you make the most of every dollar.

With proper planning and awareness of state and federal guidelines, 529 plans can provide long-term value and support for your family’s educational and financial goals.