New 529 Plan Rules Let Gen Z Fund Careers—Not Just College
A 529 plan, traditionally used to save for college, is now far more versatile.
Thanks to recent legislation, especially the One Big Beautiful Bill Act (OBBBA) passed in July 2025, 529 funds can support a much broader range of education and career paths—reflecting how Gen Z is redefining learning and work.
Rather than defaulting to a four-year degree (and the student debt that often comes with it), many young adults are opting for trade schools, apprenticeships, or careers in the creator economy. The latest 529 updates acknowledge and support this shift.
What’s New in 2025
1. Expanded K–12 Use
Previously limited to $10,000/year for tuition, 529 plans can now cover:
- Books
- Online courses
- Testing fees (SAT, ACT)
- Dual enrollment
- Tutoring by qualified professionals
- Educational therapies for students with disabilities
Starting January 1, 2026, the annual K–12 cap increases to $20,000.
2. Career and Adult Learning
Funds can now be used for:
- Vocational training
- Professional certifications
- Licensing programs
- Continuing education (e.g., automotive repair, food safety)
- Registered apprenticeships
Eligible programs include those recognized by federal and military education initiatives.
3. Rollovers to Roth IRAs
- Under the SECURE 2.0 Act (active since 2024), up to $35,000 in unused 529 savings can be rolled into the beneficiary’s Roth IRA—if the account is at least 15 years old and subject to annual contribution limits.
- This helps families avoid penalties if funds go unused for education.
4. Additional Flexibility
529 accounts can now be used for:
- Student loan repayments (within limits)
- Education expenses at public, private, or religious K–12 and postsecondary institutions
- Personal development and alternative learning pathways
Why It Matters
These changes turn the 529 from a “college savings” tool into a flexible education and career savings account—ideal for today’s diverse learning paths. Families can now plan more confidently, knowing their savings can adapt to a child’s (or adult’s) evolving goals.
Things to Keep in Mind
Not all expenses qualify; rules, limits, and state-level variations still apply. Some details (like rollout timelines and regulatory guidance) are still being clarified as of mid-2025. It’s wise to consult a financial advisor or tax professional before making changes.
Bottom Line
The 529 plan has grown up. It’s no longer just for college—it’s for careers, skills, and the future Gen Z is already building.
Source: Fortune
