When people think of 529 savings plans, the first thing that comes to mind is saving for college tuition. While that's a primary benefit, 529 funds are much more versatile than you might realize. Changes to legislation have expanded their potential uses, making them a powerful tool for families planning for education costs. Here are some of the ways you can use 529 funds beyond traditional tuition payments.
K-12 Education Expenses Thanks to changes in tax laws, 529 plans can now be used to pay for up to $10,000 per year in tuition for elementary, middle, or high schools. This applies to private, public, and religious institutions.
Apprenticeship Programs If your child opts for a hands-on learning path, 529 funds can cover costs related to qualified apprenticeship programs. These programs must be registered with the U.S. Department of Labor, but eligible expenses can include tuition, fees, books, and required equipment like tools.
Student Loan Repayment A newer provision allows up to $10,000 per beneficiary (and $10,000 for each of their siblings) to be used for student loan repayment.
Room and Board 529 plans can be used for on-campus housing and some off-campus arrangements, provided the expenses don't exceed the college's published cost of attendance.
Technology and Supplies Laptops, software, internet access, and other required equipment are all eligible expenses for students using 529 funds.
Continuing Education Adults looking to boost their careers or change paths can use the funds to pay for qualified continuing education courses, certifications, or graduate programs.
Savings for the Future As of 2024, unused 529 funds can be rolled into a Roth IRA without triggering income taxes or penalties.
Important Planning Tip It's essential to ensure that your expenses meet the IRS's "qualified education expenses" criteria, as non-qualified withdrawals are subject to income tax and a 10% penalty on the earnings portion. Careful planning and consultation with a plan advisor, financial advisor, or tax professional in your state are essential.