529 Plans Aren’t Just for College Anymore: 7 Lesser-Known Ways to Use Your Funds

A 529 plan used to be a narrow tool for college savings. That’s changed.

Recent legislative changes under the One Big Beautiful Bill Act (OBBBA) have made these plans far more flexible, giving you additional ways to use the money without triggering taxes or penalties. Depending on your situation, those funds can now support ongoing education, help pay down student loans, or even go toward retirement.

If you’ve built up a 529 balance and aren’t sure how it fits into your plan anymore, or you’re looking for a more tax-efficient way to save for education-related expenses, it’s worth taking a fresh look at how these accounts can work for you today.

7 Lesser-Known Ways to Use Your 529 Plan Funds

#1: K–12 Education

Starting in 2026, you can use up to $20,000 per year per student for K–12 tuition at public, private, or religious schools. That’s a meaningful increase from the previous $10,000 limit and opens the door to using these funds more strategically during your child’s school years.

Beyond tuition, many plans now allow for a broader range of education-related expenses. That can include curriculum and instructional materials, books, online programs, tutoring, standardized test fees like the SAT or ACT, dual enrollment courses, and certain therapies for students with disabilities.

If you’re already paying for any of these expenses out of pocket, this is an opportunity to revisit how your 529 plan fits into your overall cash flow and planning strategy.

#2: Trade Schools, Vocational Programs, and Apprenticeships

529 plans can also support career paths that don’t follow the traditional four-year college route. You can use these funds for tuition, required fees, books, and supplies at eligible vocational or trade schools, including technical institutes, cosmetology programs, and culinary schools, as long as they participate in federal student aid programs.

They also apply to registered apprenticeship programs. That includes the cost of textbooks, equipment, and other required materials for programs recognized by the U.S. Department of Labor or a state apprenticeship agency.

#3: Career Credentials and Continuing Education

If you’re investing in your skills to grow your income or pivot into a new field, a 529 plan can help offset those costs in a tax-efficient way.

For example, you can now use 529 plan funds for post-secondary credential and certificate programs, even if they aren’t part of a traditional degree path. That includes tuition, required fees, and materials for programs designed for adult learners or those making a career change.

Funds can also cover the costs of earning or maintaining a professional license or certification. That includes exam fees and continuing education required to keep your credentials current, as long as the program meets federal 529 guidelines.

#4: Room, Board, and Living Expenses

529 funds can also help cover the day-to-day costs that come with being a student.

For those enrolled at least half-time, on-campus room and board typically qualify up to the school’s published cost of attendance. That gives you a clear ceiling for what can be covered tax-free.

Off-campus living expenses can also count, but the rules are more specific. Rent and groceries are generally eligible up to the school’s stated allowance for room and board. But keep in mind that dining out usually doesn’t qualify, and you’ll need to rely on the school’s cost estimates and keep good records to support the expenses.

#5: Special Education and Support Services

529 plans can now help cover services that support a student’s ability to learn. This includes certain educational therapies for students with disabilities, such as occupational, behavioral, physical, and speech-language therapy, when provided by a licensed or qualified practitioner and connected to the student’s education.

Specialized tutoring and other support services may also qualify if they’re part of the student’s educational needs, though eligibility depends on federal guidelines and your specific state plan.

Lastly, a provision allowing 529 funds to be rolled into an ABLE account for the beneficiary or a qualifying family member was set to expire at the end of 2025. The OBBBA removed that deadline, so these rollovers are now allowed indefinitely.

#6: Student Loan Repayment

The SECURE Act added student loan repayment as a qualified use for 529 funds. You can use up to $10,000 per beneficiary, over their lifetime, to pay down qualified education loans, including both federal and private student loans. In addition, you can use up to $10,000 toward the qualified student loans of each of the beneficiary’s siblings.

Keep in mind that if you pay student loan interest with tax-free 529 funds, you can’t also claim that interest for the student loan interest deduction, so it’s important to coordinate how you use these dollars.

#7: Roth IRA Rollovers

Thanks to the SECURE Act, leftover 529 funds no longer have to stay tied to education. If you end up with excess 529 savings, you can roll unused funds into a Roth IRA in the beneficiary’s name without triggering income tax or penalties, subject to certain limits.

There are a few important conditions to keep in mind:

• There’s a lifetime rollover cap of $35,000 per beneficiary.
• The 529 plan must be open for at least 15 years before making any rollovers.
• Only the beneficiary of the 529 can receive the Roth IRA rollover.
• Contributions (and associated earnings) made within the last 5 years aren’t eligible to be rolled over.
• Rollovers are subject to the annual Roth IRA contribution limit, so you may need to spread transfers over multiple years.
• The beneficiary must have earned income at least equal to the amount rolled over in that year.
• The beneficiary must be eligible to contribute to a Roth IRA based on income limits in that year.
• Rollover must be a direct trustee-to-trustee transfer to avoid taxes or penalties.

Because of these constraints, this strategy often works best when you implement it over several years rather than all at once.

Make Your 529 Plan Funds Work for What Comes Next

529 plans have become far more flexible than they used to be, which means the value isn’t just in how much you’ve saved, but in how you use it. With options that extend beyond college to student loans, career development, and even retirement, these accounts can support multiple phases of your life.

That said, it’s important to consider the tradeoffs. When and how you use these funds can impact taxes, cash flow, and your broader financial plan. This is where a thoughtful approach can make a meaningful difference.

If you’re not sure how your 529 fits into your current plan, or you want a clear strategy for using these funds, we can help you think it through. At Simplicity Wealth Management, we work with busy tech professionals to make informed decisions and turn opportunities like this into long-term financial stability. Schedule a complimentary Simplicity Session to get started.