Section 529 plans, also known as Qualified Tuition Plans (QTPs), have long been a powerful tool for families seeking tax-efficient ways to save for educational expenses. These accounts allow funds to grow tax-free, and withdrawals remain tax-exempt when used for approved educational purposes. Although contributions are not deductible at the federal level, the tax advantages during growth and withdrawal make them a popular choice.

Thanks to recent legislative updates under the One Big Beautiful Bill Act (OBBBA), the scope of what these accounts can cover has grown significantly.

Broader Educational Applications

Traditionally, 529 plans were used primarily to pay for college tuition, with limited use (up to $10,000 annually) allowed for K–12 tuition.

However, beginning July 5, 2025, 529 plan funds can be used for a much wider variety of post-secondary and career-related education expenses. This includes:

• Professional certifications
• Occupational licenses
• Credentialing programs

These expenses can be incurred through traditional universities, community colleges, trade and technical schools, or other accredited educational institutions. Adults can also use these funds for continuing education, even after earning a degree or prior certification.

Examples of Eligible Expenses

• Licensing fees for trades such as cosmetology or barbering
• Continuing medical education for licensed physicians
• Equipment and supplies required for vocational training, such as welding tools

This expansion reflects a shift in 529 plans from being just college savings vehicles to becoming broader lifelong learning and career development tools.

Who Can Use a 529 Plan?

While these plans are commonly opened for children or grandchildren, any individual can open and benefit from a 529 account, including adults planning for future education or retraining. You can:

• Set up a 529 account for yourself or your spouse
• Change the beneficiary at any time
• Leave funds in the account indefinitely, as there is no expiration or time limit
• Roll over up to $35,000 from a 529 account into a Roth IRA (subject to conditions)

This flexibility makes 529 plans valuable for multi-generational education planning or as a savings tool for those seeking new credentials or career shifts.

Enhanced K–12 Education Coverage

The OBBBA also expands 529 plan benefits for K–12 education. Previously limited mainly to tuition, these funds can now cover a broader range of qualified educational costs, such as:

• Textbooks and online learning resources
• Tutoring services
• Fees for standardized testing
• Therapy services for students with disabilities

Additionally, starting in 2026, the annual withdrawal limit for K–12 expenses will double – from $10,000 to $20,000 per student.

Summary of Key Updates Under the OBBBA

Area	Previous Rule	New Rule (OBBBA)
Post-Secondary Use	College and limited K–12 tuition	Now includes licenses, credentials, and continuing education
K–12 Expenses	Tuition only (up to $10K/year)	Now includes materials, tutoring, therapy; limit increases to $20K in 2026
Account Holders	Typically parents saving for children	Adults can save for themselves/spouses
Rollover Option	Limited options for unused funds	Up to $35K can be rolled into a Roth IRA
Time Limit	None	Still no expiration or time-based withdrawal requirement

Why This Matters

With these expanded provisions, Section 529 plans are more versatile than ever. Whether you’re saving for a child’s private school tuition, planning for your own career change, or funding lifelong learning, these accounts offer robust tax advantages and unmatched flexibility.

Contact GFG to learn more about how you can benefit from these updated 529 plan rules.

Resources:

my529: Federal Changes to Qualified Education Expenses

Kiplinger: How the One Big Beautiful Bill Act Will Reshape 529 Plans