Key Takeaways
- 529 plans are more flexible than ever, now covering a broader range of education paths and expenses
- New 2026 rules expand K–12 usage and credentialing options, increasing planning opportunities
- Recent legislation has added tax-efficient strategies, including Roth IRA rollovers and student loan repayment
Here is a high-level overview of the most important policy changes, including new rules taking effect in 2026, as well as key enhancements from recent years.
What’s New in 2026
The One Big Beautiful Bill Act (H.R. 1), signed into law in 2025, introduces significant changes to 529 plans that take effect in 2026 and beyond.
K-12 Annual Cap is Doubled
Starting January 1, 2026, the annual withdrawal limit for K-12 education expenses increases from $10,000 to $20,000 per student. This allows families to use more 529 funds for elementary and secondary education costs.
Expanded K-12 Qualified Expenses
The list of qualifying K-12 expenses has been expanded beyond tuition. Distributions can now be used for:
- Curriculum materials and digital learning tools
- Tutoring services
- Online education platforms or subscriptions
- Educational therapies for students with disabilities
- Standardized test fees (SAT, ACT, AP)
- Dual-enrollment tuition for college courses taken during high school
Important: While these changes apply at the federal level, state tax treatment may differ, so it’s important to confirm how your state handles these expenses.
New Qualifying Uses for Postsecondary Credentials
529 plans can now cover career credentialing programs, including:
- Professional licenses (e.g., CPA, bar exam)
- Trade certifications and apprenticeship programs
- Continuing education required to maintain credentials
Eligible expenses include tuition, testing fees, books, equipment, and continuing education required to obtain or maintain credentials.
Permanent Extension of ABLE Account Enhancements
Tax-free rollovers from 529 plans to ABLE accounts, previously set to expire December 31, 2025, are now permanent. Additional provisions, including ABLE-to-Work contributions and Saver’s Credit eligibility, have also been extended.
Key Enhancements from Recent Years
Roth IRA Rollovers (SECURE Act 2.0 – 2022)
Unused 529 plan funds in your account? These funds can now be rolled into a Roth IRA for the beneficiary—subject to certain conditions:
- The 529 must have been in place for at least 15 years
- The Roth IRA must be in the beneficiary’s name
- Rollovers are subject to annual contribution limits
- Lifetime rollover limit of $35,000
- Contributions and earnings from the past five years are excluded
Student Loan Repayment (SECURE Act – 2019)
529 plans can be used to repay student loans:
- Up to $10,000 per beneficiary (lifetime limit)
- An additional $10,000 per sibling
This allows families to continue using 529 funds even after formal education ends.
Apprenticeship Programs
Funds can be used for expenses related to Department of Labor–approved apprenticeship programs, including:
- Tuition
- Books and supplies
- Required equipment
Accelerated Gifting: Fund a 529 in One Large Contribution
For families looking to fund education more aggressively (sometimes called superfunding), 529 plans offer a unique gifting opportunity:
- Individuals can contribute up to $95,000 per beneficiary in a single year
- Married couples can contribute up to $190,000 using gift-splitting
- These contributions are treated as five years’ worth of annual gift exclusions
This strategy allows assets to begin compounding sooner, though it requires filing a gift tax return (Form 709).
What Should Families Do Now?
Given the expanded flexibility of 529 plans, now may be a good time to revisit your strategy. Consider:
- Does the higher K–12 limit change how you plan to use the funds?
- Do new credentialing options align with your child’s or family’s goals?
- Should you adjust your contribution or gifting strategy?
- Does the expanded coverage for credentials align with your child’s interests?
If you’d like to review your 529 strategy—or explore how these changes may impact your broader financial plan—your Financial Advisor can help you take a thoughtful, coordinated approach.
Working With Janney
Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship is in your best interest based on the information you provide when you complete or update your client profile.
If you engage in a brokerage relationship, you will buy and sell securities on a transaction basis and pay a commission for these services. Our recommendations for the purchase and sale of securities will be based on what is in your best interest and reflect reasonably available alternatives at that time.
If you engage in an advisory relationship, you will pay an asset-based fee, which encompasses, among other things, a defined investment strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory relationships.
For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences.
Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.
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