When you hear the phrase “529 plan,” you are likely to think of one thing: saving for children’s or grandchildren’s college education.

It’s time to expand your thinking!

A series of unheralded changes over the past few years has transformed these accounts into far more flexible financial tools.

Today, 529 plans can help families pay for everything from kindergarten tuition to the physical tools needed for an apprenticeship—and even jump-start a child’s far-in-the-future retirement.

At its core, a 529 plan is a tax-advantaged investment account. Your contributions grow tax-deferred, and withdrawals are federally tax-free when used for “qualified education expenses.”

The important thing to know is that what counts as “qualified” has expanded significantly.

One of the most notable changes is that your 529 account can now be tapped well before college. Families can withdraw up to $20,000 per student per year for K–12 tuition at public, private, or religious schools. That’s double the amount from last year.

Trade Schools and Other Nontraditional Paths

Many savers still use their 529 accounts to pay for college, and for good reason. According to the College Board, the average published price for tuition and fees for the average full-time student this school year is $11,950 at an in-state public university, and $65,470 at a private school.

And now, 529 funds can be used at vocational schools, trade programs, and even certain international institutions, as long as they participate in federal financial aid programs.

Other qualified expenses may include:

• Tuition and fees (including online colleges)
• Tools and supplies required for the trade
• Books and equipment
• Computers and peripheral equipment (but not computer games)
• Room and board (with certain limitations)

Even registered apprenticeship programs qualify, covering costs like tools, uniforms, and certification fees. Funds can also be used for professional certifications and credentialing programs, reflecting a broader definition of education in today’s economy.

In short: you can tap your 529 savings whether your student wants to become a lawyer or an electrician.

Wait, There’s More!

If you have money left in a 529 plan after your kid is done with his or her education, you can use up to $10,000 (lifetime maximum) to pay down student debt.

You can also transfer any leftover funds to another child.

This flexibility can remove one of the main obstacles many people have about funding 529 accounts: the fear that they will “overfund” the account and end up owing taxes on the remainder.

And if those options don’t work, you can convert unused 529 funds into a Roth IRA for the beneficiary, with a lifetime limit of $35,000 per child. There are a few limitations on this, however. The 529 plan must have been open for at least 15 years; the beneficiary must have income at least equal to the rollover contribution; and funds contributed within the last five years cannot be rolled over.

The rollover is both tax-free and penalty-free, avoiding the typical consequences of non-qualified withdrawals.

Each parent can contribute up to $19,000 a year for each beneficiary’s 529 account. The same goes for grandparents.

You are also allowed to contribute up to five times the annual gift tax exclusion amount in a single year — that’s $95,000 for individuals or $190,000 for married couples in 2026— without triggering federal gift taxes. This lump sum gift, known as “super funding,” is treated as if it were spread evenly over five years. It reduces the donor’s taxable estate immediately while allowing for maximum tax-deferred growth.

Looking for even more creative ways to make the most of your leftover 529 savings? Read 5 Smart Ways to Use Leftover 529 Plan Funds After Graduation.

What is Not Covered?

We have outlined lots of ways to use a 529 plan to your advantage, but there are still some significant expenses that are not covered. Among them are:

• Transportation and travel costs (i.e. back and forth to college)
• Health insurance
• Most applications and test fees
• Gaming, extracurricular, or social activities
• Student loan interest (you can pay off the principle, but not the interest)
• Double dipping. Don’t take withdrawals for expenses that are already being covered through grants or federal tax credits.

Using funds for these non-qualified expenses can trigger federal income tax and a 10% penalty on earnings.

It’s important to note that you must submit your request for 529 withdrawals within the same calendar year (not academic year), as you make the payment. Don’t withdraw the money in December and pay the tuition bill in January.

Even if you follow all the rules, qualified expenses must be reported to the IRS, so it’s important to keep careful records.

The Bottom Line

Taken together, these changes have transformed the 529 plan from a narrow college-savings vehicle into a multi-purpose financial tool.

The 529 program used to be a rigid college savings vehicle, but it can now be a financial tool to help pay for expenses from kindergarten through retirement.

Education planning is an important part of one’s financial plan because it’s a significant expense that can impact long-term financial independence. If you have questions about how to set up or use an existing 529 College Savings Plan, don’t hesitate to reach out to an EKS advisor.