529 Plans After the 2025 Law: K-12, Credentials and 529-to-Roth Rollovers
A 529 can now pay for far more than college: K-12 books and tutoring, licensing exams and, eventually, a Roth IRA. Here's what changed, when each change started and where your state may not follow.
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📐 Figures verified Sep 28, 2026 against Public Law 119-21 (the 2025 law's 529 and ABLE changes), IRS Publication 970 (529-to-Roth and student loan rules), IRS release IR-2025-111 (the 2026 IRA limit) and state conformity summaries from Saving for College and IRAHelp. Growth in the example is an illustrative 6% a year. How we check numbers →
The 2025 law made 529s more flexible. From July 5, 2025, K-12 withdrawals can cover books, tutoring, test fees and therapies, not just tuition, and credential programs qualify. From 2026 the K-12 cap is $20,000 a year per student. And since 2024, leftover money can move to the beneficiary's Roth IRA, up to $35,000 for life. Check your state first: many don't follow every federal change.
Numbers That Matter
| Figure | Amount | Source | Verified |
|---|---|---|---|
| K-12 withdrawal cap | $20,000 a year per student from 2026, across all 529s (was $10,000) | P.L. 119-21 | Sep 28, 2026 |
| Wider K-12 expenses and credential programs | Qualify for withdrawals after July 4, 2025 | P.L. 119-21 | Sep 28, 2026 |
| 529-to-ABLE rollovers | Permanent (were set to end after 2025) | P.L. 119-21 | Sep 28, 2026 |
| 529-to-Roth IRA lifetime limit | $35,000 per beneficiary; the 529 must be open 15+ years | IRS Publication 970 | Sep 28, 2026 |
| Roth IRA contribution limit, 2026 | $7,500, which also caps each year's 529 rollover | IRS IR-2025-111 | Sep 28, 2026 |
| Student loan payments from a 529 | $10,000 lifetime per borrower | IRS Publication 970 | Sep 28, 2026 |
What Changed, and When
| Change | Starts | What it means |
|---|---|---|
| Wider K-12 expenses | Withdrawals after July 4, 2025 | Books, curriculum, online materials, tutoring, test fees, dual enrollment and educational therapies, not just tuition |
| K-12 cap doubles | 2026 | $20,000 a year per student across every 529 that names them |
| Credential programs | Withdrawals after July 4, 2025 | Tuition, fees, books, supplies and equipment for recognized credential programs, plus exam and continuing-education fees |
| 529 to ABLE | Permanent | Rollovers to an ABLE account no longer end after 2025 |
| 529 to Roth IRA | Since 2024 (SECURE 2.0) | Up to $35,000 over the beneficiary's lifetime |
K-12: What Now Counts
Tuition at a public, private or religious elementary or secondary school has qualified since 2018. For withdrawals after July 4, 2025, the list also includes:
- Curriculum and books, other instructional materials and online educational materials.
- Tutoring or classes outside the home, if the tutor isn't related to the student and is a licensed teacher, has taught at an eligible school or is a subject-matter expert.
- Test fees for standardized achievement tests, Advanced Placement exams and college admission exams.
- Dual enrollment fees for college courses taken in high school.
- Educational therapies for students with disabilities, from a licensed or accredited practitioner.
Everything above shares one cap: $20,000 a year per student from 2026, however many accounts or relatives are paying. Take the withdrawal in the same calendar year you pay the bill, keep the receipts, and ask your plan how it treats homeschool costs before assuming they qualify.
Credential Programs and Licenses
529 money could already pay for trade and vocational schools that take federal student aid. Since July 5, 2025 it can also pay for recognized postsecondary credential programs that don't: tuition, fees, books, supplies and equipment, the fee for a licensing or certification exam, and continuing education you need to keep a credential. Recognized programs include those on your state's workforce training provider list and other programs that lead to an industry-recognized certification, license or apprenticeship credential. Ask the program which list it's on before you withdraw. For short programs, a Workforce Pell Grant may cover part of the cost first.
Leftover Money: The 529-to-Roth Rollover
Since 2024, a 529 can move money straight into the beneficiary's Roth IRA, with no income limit, if you follow the rules:
- The 529 has been open at least 15 years for that beneficiary.
- Contributions from the last five years, and their earnings, can't move.
- Each year's rollover can't exceed the Roth IRA limit ($7,500 in 2026), minus any other IRA contributions the beneficiary makes, or the beneficiary's earned income.
- $35,000 lifetime per beneficiary, sent directly from the plan to the Roth IRA.
One open question: the IRS hasn't said whether naming a new beneficiary restarts the 15-year clock, so plan as if it might.
529 to ABLE
An ABLE account holds savings for a person with a disability without affecting most means-tested benefits. The 2025 law made 529-to-ABLE rollovers permanent. A rollover counts toward the ABLE account's annual contribution limit, and since January 1, 2026 ABLE accounts are open to people whose disability began before age 46, up from 26.
Check Your State Before You Withdraw
Federal tax-free doesn't mean state tax-free. Saving for College counted 20 states that fully follow the federal 529 rules as of January 2026; the rest differ somewhere. Roughly a dozen, including California and New York, still treat K-12 withdrawals as non-qualified, so the earnings are taxed at the state level and past deductions can be clawed back. For 529-to-Roth rollovers, Indiana, Louisiana, Massachusetts, Michigan, Minnesota, Utah, Vermont and the District of Columbia have said they'll recapture deductions or credits, New York treats the rollover as non-qualified, and California taxes the earnings plus an extra 2.5%. Check your plan's disclosure or your state tax agency first.
Worked Example: One Family, Two Uses
- Ava, a high school sophomore: in 2026 the Lees pay $17,500 of private-school tuition, $1,500 for a licensed math tutor and $250 in AP exam fees, $19,250 in all, under the $20,000 cap and federally tax-free. Under the old rules only $10,000 of tuition qualified; if 35% of the other $9,250 was earnings, at a 22% bracket plus the 10% penalty that would have cost about $1,036.00.
- Ben, a new graduate: his 529, opened in 2008, has $22,000 left. The $3,000 contributed in the last five years, plus $400 of earnings on it, has to stay, so $18,600 can move to his Roth IRA: $7,500, $7,500, $3,600 over three years, since he earns more than that each year.
- If Ben's Roth grows 6% a year until he turns 65, those rollovers could be worth about $205,500, tax-free under current rules.
Returns, tax brackets and balances are illustrative; the rollover schedule assumes the $7,500 limit and no other IRA contributions. In a state that doesn't conform, the Lees would check the state tax first. The Lees are an illustration.
Decision Rules
If this, then that
- If you pay private K-12 tuition → you can take up to $20,000 a year per student federally tax-free from 2026; confirm your state treats it the same way.
- If you pay for tutoring, AP or SAT fees or therapies → they qualify federally; keep receipts and check the tutor rules.
- If money is left after school → consider, in order, a new beneficiary, a credential or graduate program, up to $10,000 of student loans, a Roth rollover or an ABLE rollover before a taxable withdrawal.
- If you might want a Roth rollover someday → open the 529 early; the 15-year clock starts when the account does.
- If K-12 withdrawals would drain college money → price college first; every K-12 dollar is a dollar that stops compounding.
Mistakes to avoid
- Assuming your state follows every federal 529 change.
- Withdrawing in a different calendar year than you paid the expense.
- Paying a relative to tutor and counting it as qualified.
- Rolling to a Roth without earned income, or above that year's limit.
- Rolling over contributions made in the last five years.
Related: the best 529 plans compares state plans and deductions; Trump Account vs 529 vs custodial Roth vs UTMA covers where a child's first dollars go; Workforce Pell explains grants for short training; and net price, not sticker price shows how to compare college offers.