New Ways to Use 529 Plans: Expanded Uses and Smart Strategies

529 college savings plans were once used mainly for traditional college tuition, books, and housing. Today, these accounts offer far more flexibility. Understanding the new ways to use 529 plans can help families maximize tax advantages while adapting to modern education and career paths.

Broader Qualified Educational Expenses

529 plan funds can now be used for more than four-year college programs. Eligible expenses include certificate programs, continuing education, and approved workforce training courses. This expansion supports students and professionals pursuing credentials, skill development, or career changes without losing tax benefits.

Higher K–12 Spending Limits

Families can now use a larger annual amount from 529 plans for qualified K–12 education expenses. This change makes it easier to cover private school tuition and related costs while maintaining the tax-free growth of the account.

Support for Career Training and Certifications

Modern careers often require certifications, licenses, or specialized training. 529 plan funds may be used for approved exam fees, credential programs, and professional development courses, making these plans valuable for lifelong learning—not just college.

Roth IRA Rollover Opportunity

Unused 529 plan funds no longer have to sit idle. Eligible balances can be rolled into a Roth IRA for the beneficiary, up to a lifetime limit. This option allows families to shift unused education savings into long-term retirement growth without tax penalties, provided certain requirements are met.

Changing the Beneficiary

If the original beneficiary doesn’t need all the funds, the account owner can change the beneficiary to another qualifying family member. This flexibility keeps the savings working for future education or financial goals across generations.

Conclusion

The new ways to use 529 plans make them more versatile than ever. With expanded K–12 uses, support for career training, and Roth IRA rollover options, these plans now serve both education and long-term financial planning needs. Families who understand these updates can better align their savings with real-world goals.