Some of the biggest challenges many face when it comes to education are financial. Luckily, a 529 college savings plan can help. And they're not just for college anymore—added to the tuition eligibility are K-12, private and religious schools. These funds can also be used for four- and two-year colleges, trade schools, graduate programs, and some international institutions.
A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. State tax treatment of 529 plans is only one factor to consider when selecting a savings plan. Also, take into account the fees and expenses associated with the particular plan. Whether a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary. State tax laws may be different from federal tax laws. Earnings on non-qualified distributions will be subject to income tax and a 10% federal penalty tax.
Here's a list of 529 qualified educational expenses:
Educational Strategy
To take advantage of the 529 distribution for educational costs, your request for funds must be made during the same calendar year the expense is incurred. If you request cash during the academic year, you may owe taxes as a non-qualified withdrawal.
- Higher Education - Post-secondary students (after high school) are eligible to participate in the federal student aid program administered by the U.S. Department of Education and qualify for the use of 529 funds.
- Apprenticeship Programs or Trade School - Students can draw from their 529 accounts to pay expenses related to certified apprenticeships or eligible trade schools.
- Early Education - K-12 schools, public, private, and religious institutions can now use 529 plan distributions up to $10,000 per student for tuition.
Lifestyle and School Supplies
Learning how best to use your 529 distributions, while establishing a manageable budget for qualified and non-qualified purchases, can be tricky. Here are some tips to keep in mind.
- Housing - Campus housing can be paid through 529 distributions, including college room and board fees. Off-campus housing rentals qualify up to the same cost of the room and board on campus.
- Books and Supplies - Paper, pens, and textbooks required by the specific course are qualified expenses. Schools set the budget limit for books and supplies.
- Needs and Services - Special needs equipment and services qualify for 529 distribution. Students using equipment for mobility may be eligible for 529 distribution purchases. Depending on the circumstances, other modes of transportation may also apply.
Technology
Many don't realize that computers and some electronics are included on the list of qualified education expenses. Keep in mind that these items must be required as part of the student's study programs to qualify.
- Personal Computer - Computers must be used primarily by the student during any of the years the student is enrolled at the eligible educational institution.
- Software - Software may qualify as a 529 distribution expense, but only if it's used by the student and required by a class. For example, technical engineering or design classes may involve computerized assignments.
- Internet - Lastly, under certain circumstances, internet services can be paid for using 529 funds. Check with your internet service provider (ISP) for more details.
Student Loan Repayment
Up to $10,000 per beneficiary can be used to pay down qualified student loans. $10,000 can also be utilized for each sibling of the listed beneficiary.
Expenses for Qualified Family Members
The beneficiary of a 529 plan can be changed to another qualified family member to cover their educational expenses. The IRS defines a qualified family member broadly to include siblings, children, parents, grandchildren, nieces/nephews, aunts/uncles, first cousins, and in-laws.
529-to-Roth Conversion
Up to $35,000 of unused 529 money can be rolled into a Roth IRA for the named beneficiary if certain rules are followed. The 529 account must have been open for at least 15 years. The amount rolled over counts toward the beneficiary’s annual contribution limit. For example, in 2025, $7,000 can be rolled over minus any other Roth contributions, as long as the beneficiary has enough earned income to cover the amount being contributed.
The above tips are sure to help get you started, but make sure to check with the school as well as chat with your financial professional to learn more. As mentioned earlier, each state and school may have different restrictions on using 529 funds. If you are unsure about anything, your plan sponsor may be able to provide some guidance.
A 529 plan is a powerful tool to help families steward educational resources wisely, offering flexibility and tax advantages across a wide range of learning paths—from kindergarten through graduate school and beyond. With thoughtful planning and guidance, these funds can ease the financial burden of education while supporting your child’s future. If you are not currently working with an advisor, get in touch with our team by filling out our Discovery Form to schedule a 30-minute introductory call. We would love to discuss your legacy, values, and goals to determine if Harvest Point® would be a good fit to help you pursue them.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.