New Ways to Use 529 Funds

Tax-free withdrawals from these plans could help you sharpen your job skills.

- BY ELLA VINCENT

WHEN Congress established 529 plans in the 1990s, they were designed as a tax-advantaged tool to save for college. Contributions to these investment accounts grow tax-deferred, and you can withdraw funds tax-free for qualified college expenses, such as tuition, room and board, computers, and books. Most states and Washington, D.C., also offer a tax deduction or credit for residents who contribute to their state's plan.

Over the years, tax-free uses for 529 funds have expanded to include some other educational costs, too, including apprenticeship programs and tuition for kindergarten through 12th-grade schooling. The One Big Beautiful Bill Act, signed into law over the summer, has further extended the ways you can use 529 money, including a wider range of postsecondary educational programs.