How to Use 529 Plans (and What’s New with the OBBBA)
When it comes to saving for education, 529 plans remain one of the most powerful tools available. They offer tax advantages, flexibility, and now—thanks to recent updates from the Opportunity to Build a Better Budget Act (OBBBA)—even more options for how families can put that money to use. Whether you’re a parent, grandparent, or just someone planning ahead, it’s worth understanding how these accounts work and what’s changed.
What Is a 529 Plan?
A 529 plan is a tax-advantaged investment account designed to help pay for education expenses. You contribute after-tax dollars, the investments grow tax-free, and withdrawals are also tax-free—as long as they’re used for qualified education expenses.
There are two main types of 529 plans:
Savings Plans: Investment accounts for future education costs.
Prepaid Tuition Plans: Lock in current tuition rates at eligible public colleges.
Most people use the savings version, which offers more flexibility and broader investment choices.
What Can 529 Funds Be Used For?
Historically, 529s could only be used for college tuition and fees, but in recent years the rules have expanded. Here's what they now cover:
Tuition and fees for college, graduate, and vocational schools
Room and board (for students enrolled at least half-time)
Books, supplies, and equipment
Computers and internet access if required for school
K–12 tuition (up to $20,000 per year per student starting in 2026)
Student loan repayment (up to $10,000 per beneficiary)
What’s New Under the OBBBA?
The Opportunity to Build a Better Budget Act (OBBBA), passed in 2025, made several updates to how 529 accounts can be used—expanding their appeal and usefulness.
Here are the key changes:
1. 529s Can Now Cover Certain Educational Support Services
The OBBBA expands qualified expenses to include services like:
Educational therapy
Behavioral support
Specialized tutoring
This is a big win for families with neurodivergent learners or students with learning differences.
2. More Flexibility for Career & Technical Education
Vocational and trade school expenses have always been eligible, but the OBBBA clarified and expanded this to include:
Apprenticeship programs
Credentialing and licensure prep
Tools and equipment required for training
This change recognizes that not all paths require a traditional four-year degree.
3. Rollovers to Roth IRAs – Final Clarifications
While the SECURE 2.0 Act allowed limited rollovers from 529 plans to Roth IRAs starting in 2024, the OBBBA clarified some rules:
Maximum lifetime rollover: $35,000
Account must be open for 15+ years
Contributions (and earnings on those contributions) made in the last 5 years don’t count
This gives account owners another backup use for leftover funds—but it’s not a free-for-all.
Pro Tips for Using a 529 Plan Wisely
Start early. The earlier you begin saving, the more time your money has to grow.
Name yourself as the owner. This gives you control, even if the beneficiary changes.
Overfunding? Consider using excess funds for:
Another child or relative - creating a legacy education account for generations to come!
Your own continuing education
A Roth IRA rollover (if eligible)
Watch for state tax perks. Many states offer deductions or credits for in-state 529 contributions.
Coordinate with other aid. 529 withdrawals can impact financial aid calculations—timing matters.
529 plans were already a smart way to save for education. With the updates from the OBBBA, they’re now more versatile and inclusive than ever before. Whether you’re funding college, trade school, or supporting a child with unique educational needs, your 529 can be a powerful piece of your financial strategy.
Need help setting one up—or making sure you’re using it efficiently? Let’s talk.
Recent Articles Written by Kristiana:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Why Your Financial Plan Should Include More Than Just Investments
When most people think about financial planning, their minds often jump straight to stocks, bonds, and other investment vehicles. While investing is undeniably a critical component of building wealth, a truly robust financial plan encompasses much more than just your portfolio. To build lasting financial security and peace of mind, it’s important to consider several other vital elements that support and protect your financial future.
Here’s why your financial plan should include much more than just investments:
1. Tax Planning: Keep More of What You Earn
Taxes can significantly impact your net returns, and smart tax planning helps reduce your liabilities. This means more of your hard-earned money stays in your pocket instead of going to the government. Tax planning involves strategies like timing income and deductions, maximizing tax-advantaged accounts, tax diversification, asset location, and understanding how different investments are taxed. Without attention to taxes, even the best investment returns can be diminished by unnecessary tax burdens.
2. Estate Planning: Protect Your Loved Ones and Your Wishes
Estate planning isn’t just for the wealthy or elderly—it’s for anyone who wants to ensure their wishes are honored and their loved ones are cared for. Important documents like wills, trusts, powers of attorney, and healthcare directives lay out how your assets should be handled, who will make decisions if you’re unable, and how your family will be supported. Having these plans in place helps avoid confusion, legal battles, and delays during difficult times. Also, you’d be shocked at how many estate plans go unfunded and are incomplete! Your advisor should help ensure that your beneficiaries align and your trust is funded.
3. Insurance: Guarding Against Life’s Unexpected Setbacks
Life is unpredictable, and setbacks can quickly derail your financial progress. Insurance products—such as life insurance, disability insurance, and health insurance—are essential safety nets. They protect your income, cover medical expenses, and provide financial support to your family if something happens to you. Integrating insurance into your financial plan ensures that you’re not left vulnerable to risks that could otherwise cause significant financial hardship.
4. Charitable Giving: Align Your Values with Your Financial Goals
For many, financial planning is not just about accumulating wealth but also about making a positive impact. Charitable giving is a powerful way to align your values with your finances. Strategic giving can provide tax benefits while supporting causes you care about, creating a legacy that reflects your priorities. Including philanthropy in your plan can bring deeper satisfaction and purpose to your financial journey. With strategic planning, your dollars can make the biggest and most efficient impact.
Why Summer Is a Great Time to Revisit Your Full Financial Plan
Summer often brings a natural pause in the busyness of life—a perfect opportunity to step back and review your financial picture. While it’s easy to focus solely on investments during check-ins, make sure to take time to evaluate your tax strategies, estate documents, insurance coverage, and charitable goals as well. Revisiting these components ensures your plan is comprehensive and resilient to life’s changes.
Is Your Financial Plan All-Inclusive?
Investing wisely is only one piece of the financial planning puzzle. By expanding your focus to include tax planning, estate considerations, insurance protection, and charitable giving, you create a more holistic and effective plan. This approach not only builds wealth but also provides security, peace of mind, and purpose.
If you haven’t reviewed these areas recently, consider making it a priority this summer. If you’d like help crafting a complete financial plan tailored to your unique needs, I’d love to start you on the process of financial organization and freedom.
Recent Articles Written by Kristiana:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Why re-brand after 6 successful years of business with a perfectly fine name?
In 2020, we re-branded from Action Point Financial to Fiduciary Financial Advisors. Our old name worked fine. So why disrupt? As Fiduciaries, it is important to put our fee-only approach to financial planning & investment management front and center.
Watch this video to learn more about why we changed and why being a Fiduciary Advisor is so important to us (and you!). To learn more visit: https://forfiduciary.com/