New 529 plan guidelines let Gen Z spend money on careers, not simply school

The changes reflect a seismic shift in education as more Gen Zers shun the traditional four-year degree—and resulting student loan debt. Instead, many are picking up trade skills or reaping the benefits of the Creator Economy.

Key features and recent legislative changes (2025):

• Expanded K–12 qualified expenses: 529 accounts were previously limited to K–12 tuition (up to $10,000 per year), but they can now be used for additional expenses such as books, online educational materials, testing fees (e.g., SAT/ACT), dual enrollment fees, tutoring by qualified professionals, and educational therapies for students with disabilities. The annual limit for all K–12 expenses will rise to $20,000 starting January 1, 2026.
• Broader postsecondary and career use: In addition to traditional college and university costs, 529 funds may now pay for adult learners’ and career changers’ credential programs, including professional licenses, certificates (including registered apprenticeships), and continuing education courses in fields such as automotive repair or food safety. Recognized credentials include those covered by federal programs and military career advancement resources.
• 529-to-Roth IRA rollover: Under the SECURE 2.0 Act (effective since 2024), up to $35,000 in unused 529 funds can be rolled over into the beneficiary’s Roth IRA, subject to annual Roth contribution limits and other conditions (such as the 529 account being open for at least 15 years). This allows families to avoid penalties on unused funds if a beneficiary doesn’t need all 529 savings for education.
• Additional changes and flexibility: 529 funds can also be applied to student loan repayments (up to certain limits), pay for K–12 and higher education expenses across public, private, or religious institutions, and support a broader set of personal education and development goals.

• 529 accounts now serve not just as college savings plans, but as comprehensive education savings vehicles adaptable to a variety of academic and professional needs. This flexibility recognizes modern realities, such as students pursuing alternative postsecondary training paths and adults shifting careers.
• These updates provide greater clarity and planning assurance for families, especially those saving for children who may take nontraditional education or career routes.

• Rules regarding eligible expenses, contribution and rollover limits, and state-level nuances may still apply, so consulting a tax professional or financial advisor is highly recommended for those planning to leverage these new benefits.
• The expansion’s implementation details (such as some effective dates and regulatory guidance) are still emerging as of July 2025.

In summary, 529 accounts have evolved into versatile, tax-advantaged savings vehicles for many forms of education and career development, with recent Congressional changes making them more broadly applicable and beneficial for American families and individuals.