🔧3 New Uses for 529 Plans

Last month, we discussed how the “One Big Beautiful Bill Act” shook the student loan borrower landscape. This month, let’s touch on the new adjustments to 529 plans that you need to know:

• K-12 expenses from a 529 – An expansion from $10,000 to $20,000 annually that can be used to cover private or religious school tuition. This is also inclusive of broader K-12 expenses coverage that includes items like textbooks, tutoring services and educational therapies for students with disabilities.
  • What this means: The 529 plan is becoming more and more of a swiss army knife. Not only is it a way to save for college, but now it makes it a real tool to save for private high school tuition or college preparatory expenses.
• The Roth IRA rollover rule – Are you aware that you can roll up to $35,000 from a 529 for your child into a Roth IRA in their name tax free and penalty free? This is an important additional benefit to consider for families that have potentially overfunded their 529 plans.
  • What this means: Now, not only this money can be pulled out tax free, but it can also be used to jumpstart retirement savings for recent grads.
• Credentialing and continuing education programs – What if your child doesn’t go to college? New legislation allows for 529 plans to also cover credentialing programs (Think welding, trades or aviation programs).
  • What this means: I’m a little biased here as this also allows for CERTIFIED FINANCIAL PLANNER® coursework and exams to be a covered 529 expense, but this goes a long way to alleviate a common parent concern about 529s: What if my child doesn’t go to college? With pathways to assist those in the trades, it’s more reason to consider 529s for many families.

As a financial planner, I get excited about opportunities like this, as there’s many more avenues and use cases for 529s than ever before.

What questions do you have about utilizing a 529 plan in your situation. Feel free to reach out. I’m happy to help.

All the best,

Andrew Holmes, Certified College Planning Specialist™

Andrew@PlanWithFPS.com

617-630-4978

Check out my whitepaper: 5 College Planning Mistakes to Avoid

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