What do “Macarena” by the Bayside Boys, “Killing Me Softly” by the Fugees, “Ironic” by Alanis Morisette, and 529 plans all have in common?
They all came to us in 1996, of course!
Congress first created 529 plans by passing Section 529 of the Internal Revenue Code as part of the Small Business Job Protection Act. Although 529 plans became nationwide as a result of this federal legislation, proof of concept was actually provided about a decade earlier when Michigan created the first prepaid college savings vehicle in 1986 (the year of “Say You, Say Me” by Lionel Richie, “Broken Wings” by Mr. Mister, and the iconic “Sledgehammer” by Peter Gabriel).
Since their creation, 529 plans have had a pretty straightforward purpose: to allow American families to save for college tuition and expenses.
But that’s changed dramatically.
Recent legislation, including the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 of 2022 and last year’s On Big Beautiful Bill Act (OBBBA), has quietly transformed the humble 529 into one of the most flexible education and long-term planning tools available to families.
Today, a 529 plan can help pay for everything from private K–12 tuition to apprenticeships, professional certifications, student loans, and even retirement savings through Roth IRA rollovers.
If you haven’t looked at your 529 options lately, you may be surprised by how much broader the rules have become. Here are 29 ways you can use a 529 account today, including some of the newer and lesser-known opportunities.
Traditional College Expenses
These are the classic qualified education expenses most people already associate with 529 plans.
- College Tuition. Tuition at eligible colleges and universities remains the primary use for 529 funds.
- Community College Tuition. Two-year schools and community colleges generally qualify as well.
- Graduate School Tuition. 529 funds can be used for law school, medical school, MBA programs, and other graduate degrees.
- Trade School Tuition. Many vocational and technical schools qualify for 529 usage.
- Vocational Training Programs. Career-focused educational programs are increasingly covered.
- Mandatory Fees. Enrollment fees and other required institutional charges are eligible expenses.
- Textbooks. Required books and course materials qualify.
- School Supplies. Necessary educational supplies may be covered.
- Lab Equipment. Required lab gear and technical materials can often be paid from a 529 account.
- Computers and Laptops. Technology required for coursework is generally eligible.
- Printers and Peripherals. Supporting equipment tied to school use may qualify.
- Educational Software. Programs and software required for classes are typically covered.
- Internet Access. Internet service needed for coursework may qualify during enrollment periods.
Housing and Student Living Costs
Many families overlook how broadly 529 funds can help with student living expenses.
- On-Campus Housing. Dormitory costs are usually eligible.
- Off-Campus Housing. This one surprises a lot of folks. Apartments and rental housing may qualify, within the school’s cost-of-attendance guidelines. The university will provide an annual cost of on-campus room and board that they adjust each year. Even if your student is living off-campus, you can usually still reimburse up to the full amount of on-campus room and board from your student’s 529 plan. For example, if the total cost of on-campus room and board cited by the university is $15,000, you could take out up to $15,000 to offset the cost of rent in an off-campus apartment or house.
- Meal Plans. Campus dining plans and approved food expenses are often eligible.
- Special-Needs Services. Certain services required for attendance can qualify under IRS rules.
- Study Abroad Programs. Many accredited international programs connected to eligible institutions qualify.
- Dual-Enrollment Courses. College-level courses taken during high school may also qualify.
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Expanded K–12 Uses
This is one of the biggest areas of expansion in recent years.
- Private K–12 School Tuition. With the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, families could withdraw up to $10,000 per year from their 529 plans to pay for private K-12 school tuition. The recent passage of the OBBBA has expanded that annual limit from $10,000 to $20,000.
- Religious School Tuition. Faith-based K–12 schools may also qualify for the above $20,000 annual limit.
- Tutoring and Supplemental Education. Costs for tutoring provided outside the home and educational therapy costs for students with disabilities, including occupational, behavioral, physical and speech-language therapies may now be covered from 529 plans.
- Online K–12 Programs. Virtual and online learning programs may qualify as well.
- Standardized Testing and Credentialing Costs. Certain testing and educational certification expenses may now qualify in expanded use cases.
Career Training and Workforce Development
One of the most practical changes to 529 plans is their growing usefulness outside the traditional four-year college path.
- Registered Apprenticeship Programs. 529 funds can now be used for approved apprenticeship programs.
- Apprenticeship Tools and Equipment. Required uniforms, books, and tools tied to apprenticeships may qualify.
- Professional Certifications and Licensing. Career credentials in fields like healthcare, HVAC, skilled trades, IT, and real estate may be covered.
Flexible Financial Planning Uses
These newer rules are changing how families think about long-term education savings.
- Student Loan Repayment. This expanded use was enabled by the original SECURE Act, passed in 2019. It allows 529 funds to be used to repay up to $10,000 in student loans per beneficiary. The $10,000 is a lifetime limit, not an annual limit. However, for families with more than one child, there is a way to structure the account for a larger drawdown for student loans. After the $10,000 lifetime withdrawal for student loan payment has been exhausted for one student, the beneficiary on the 529 plan can be changed to any immediate family member of the original beneficiary. Once the beneficiary change goes into effect, you can then distribute another $10,000 to make a student loan payment for that new beneficiary.
For families carrying significant education debt, this can provide meaningful flexibility for 529 plan funds after graduation.
- Roth IRA Rollovers. One of the most talked-about changes allows unused 529 funds to roll into a Roth IRA for the beneficiary, subject to certain conditions. This was enacted by the SECURE Act 2.0 in 2022.
Current rules generally include:
- A lifetime rollover limit of $35,000.
- Annual Roth contribution limits still apply (so if you are doing this on an annual basis, you’d do $7500 per year, based on the 2026 annual Roth IRA contribution limit).
- The 529 account typically must have been open for at least 15 years
- The student must have earned income of up to $7,500 in order to do the full 529 to Roth IRA rollover.
What’s so cool about this strategy is that it allows parents to start the clock on the Roth IRA “five-year rule” nice and early for their kids. The Roth IRA “five-year rule,” in short, refers to the mandatory IRS holding period on Roth assets. In order to be able to withdraw earnings tax-free from a Roth IRA, the account must have been open for at least five years and the Roth IRA account owner must be at least 59.5. There is a small caveat for those withdrawing up to $10,000 for a home purchase as a first-time homebuyer.
This change has helped reduce one of the biggest fears parents had about 529 plans: overfunding the account and ending up having to pay penalties to use those excess funds.
What Still Usually Doesn’t Qualify
Despite the broader flexibility, there are still several common expenses that generally do not count as qualified 529 uses:
- Transportation and travel
- Health insurance
- College application fees
- Sports and extracurricular fees
- General entertainment expenses
- Non-educational living costs (outside of room and board)
Because rules can vary by state and continue evolving, it’s always smart to confirm qualified expenses with your plan administrator or tax advisor before making withdrawals.
The key takeaway here is that 529 plans are no longer just “college funds.” They’ve evolved into multi-purpose education and career planning tools that can support traditional college paths, skilled trades, K–12 education, continuing education, and even retirement planning strategies.
For many families, that added flexibility makes contributing to a 529 feel significantly less risky than it did a decade ago.
If you already have a 529 plan, now may be a good time to revisit the rules. You may have more options than you realize!
529 plans come with fees and expenses, and there is a risk they may lose money or underperform. Most states offer their own 529 programs, which may provide benefits exclusively for their residents. Please consider whether the state plan offers any tax or other benefits.
**Written by Katelyn Murray, CFP®, ChFEBC®, FBS®, CFT-1™, ECA. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Katelyn Murray and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
