If you still think of a 529 as strictly a college savings account, it's time to update that picture. Recent legislation has significantly expanded what these accounts can do — and understanding the new rules can make your 529 a much more valuable tool.
A Quick History
Congress created the 529 plan back in 1996 as an IRS-designated way to save for a child's college costs. It became enormously popular — many families, including my own, have used 529s to fund children's and grandchildren's education.But on July 4, 2025, the One Big Beautiful Bill Act was signed into law, and it changes a lot about how 529s work. They're no longer just a college savings vehicle.
What's New: K-12 Expansion
The annual amount you can use for K-12 expenses has doubled, from $10,000 to $20,000 per year.
More importantly, the list of what qualifies has expanded well beyond tuition. K-12 funds can now go toward:
- Curriculum materials, textbooks, and digital learning tools
- Tutoring
- Educational therapies — occupational therapy, physical therapy, speech therapy, and behavioral therapy
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What's New: Career and Credentialing
This is the piece most people miss. 529 funds can now be used for:
- Trade programs — welding, plumbing, CDL training, and similar career paths
- Professional licensing and exam prep — things like bar exam preparation, along with other federal or state licensing requirements
- Apprenticeships
- Continuing education (CE) credits
A 529 is no longer limited to the traditional four-year college path — it now supports a much wider range of career preparation.
What's New: A Bridge to Retirement
Perhaps the most notable change for long-term planning: leftover 529 funds can now be rolled over into a Roth IRA, up to a lifetime limit of $35,000. For families who end up with unused 529 balances, this turns what used to be a "stuck" asset into a meaningful head start on retirement savings.
Other Key Changes
The ability to roll a 529 into an ABLE account has also been made permanent, though restrictions apply. Together, these changes make the 529 a far more flexible tool than it used to be.
The Bottom Line
A 529 is no longer just a college fund. It now spans K-12, career training and credentialing, college, and even retirement planning through the Roth rollover option. That's a meaningful expansion, and it's worth learning how to use it well.
If you have a 529 already, or you're considering opening one, make sure you understand how these new rules apply to your situation.
If you'd like to talk through how to make the most of a 529 for your family, or any other planning topic, visit Hamilton Financial Planning's website and schedule a quick, no-obligation call.
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Scott Hamilton is founder and chief financial officer at Hamilton Financial Planning, a wealth management firm that specializes in providing comprehensive financial planning for retirees. With over 20 years of experience in the financial industry, and having completed over 250 financial plans for retirees across all industries, Scott is passionate about providing his clients with the tools and insight they need to achieve their financial goals. He has a Bachelor of Business Administration in finance from Texas State University and an MBA in international finance from Pepperdine University. Scott has also been happily married to his wife, Gayle, for over 25 years. To learn more about Scott, connect with him on LinkedIn.