2. They're More Flexible Than You Think
There are no income or age limitations, meaning any adult can open an account for any person's future educational expenses. Account owners may change the designated beneficiary for any reason, at any time. They can even name themself as a beneficiary.
Some states require a minimum initial investment, sometimes as low as $25, to start a 529 plan. Additionally, the maximum account contribution limits are generous, ranging from $235,000 up to more than $600,000 per beneficiary.2 The plans are state-sponsored, but you can participate in mostly any state's plan. However, you should first consider your home state’s plan as it may offer tax or other benefits exclusive to state residents, such as creditor protection, scholarships, and matching contributions.
You can use funds from a 529 plan, tax-free, for most expenses at traditional undergraduate and graduate schools. You can also use them for many kinds of post-secondary education, such as art or cooking institutes, community colleges, trade and vocational schools. You can even use them for qualified apprenticeship programs and eligible international school expenses. Additionally, you can use up to $10,000 to repay qualified student loans.
Under the recently-enacted One Big Beautiful Bill Act, starting in 2026, you may be able to use 529 funds for up to $20,000 in elementary, middle, and high school tuition annually, up from a $10,000 limit previously.3 And new, effective immediately and retroactive for 2025, 529 plan uses cover a broader range of K–12 educational expenses, including:
- curriculum materials,
- books,
- online resources,
- tutoring,
- test preparation,
- standardized test fees,
- dual enrollment fees and,
- educational therapies for students with disabilities.
Career credentialing and job training programs are also now qualified expenses, with ongoing costs for maintaining professional credentials eligible. And on top of that, rollovers from 529 plans to Achieving a Better Life Experience (ABLE) accounts for individuals with disabilities and their families are now permanent, removing the previous expiration date of January 1, 2026.
Connect with your tax advisor to learn more about any state tax implications associated with paying these costs from a 529 account.
Further, effective January 1, 2024, 529 account owners may be able to transfer qualified leftover funds to a Roth IRA—for the designated beneficiary, without any tax or penalty and no income limits—making 529 plans an even more robust solution for long-term financial planning.4