7 Non-Traditional Ways to Use Your 529 Plan Funds

Congress has significantly expanded the flexibility of 529 plans in recent years, transforming them from traditional college savings accounts into broader long-term planning tools. Updates through the SECURE Act and the One Big Beautiful Bill Act (OBBBA) now allow families to use these accounts in more strategic ways while still preserving the tax advantages that make them so valuable.

If you’ve built up a 529 balance and aren’t sure how to incorporate it into your broader financial plan, or you want to use these funds more efficiently, now is a good time to revisit your options. With thoughtful planning, a 529 plan can provide more flexibility, tax efficiency, and long-term value than many families realize.

7 Alternative Ways to Use Your 529 Plan Funds

#1: K–12 Education

Beginning in 2026, 529 plans allow families to use up to $20,000 per year per student for K–12 tuition at public, private, or religious schools. That doubles the previous $10,000 limit and creates more opportunities to use these funds strategically throughout your child’s school years.

Many plans also now cover a broader range of education-related expenses beyond tuition. Depending on your state and plan, eligible expenses may include curriculum and instructional materials, books, online programs, tutoring, standardized test fees such as the SAT or ACT, dual enrollment courses, and certain therapies for students with disabilities.

#2: Trade Schools, Vocational Programs, and Apprenticeships

529 plans can also support career paths outside the traditional four-year college model. You can use these funds for tuition, required fees, books, and supplies at eligible vocational and trade schools, including technical institutes, cosmetology programs, and culinary schools, provided the program participates in federal student aid programs.

529 funds may also cover expenses related to registered apprenticeship programs. Eligible costs can include textbooks, equipment, and other required materials for programs recognized by the U.S. Department of Labor or a state apprenticeship agency.

As education and career paths continue to evolve, this added flexibility gives families more ways to use education savings to support practical, career-focused training opportunities.

#3: Career Credentials and Continuing Education

529 plans can now support professional development and career advancement in ways that extend well beyond traditional degree programs. Whether you’re building new skills, pursuing higher income opportunities, or transitioning into a different field, these accounts may help cover those costs in a tax-efficient way.

Eligible expenses now include many post-secondary credential and certificate programs, even when they are not tied to a traditional college degree. You may be able to use 529 funds for tuition, required fees, and materials for programs designed for adult learners, specialized training, or career transitions.

529 funds may also cover costs associated with earning or maintaining certain professional licenses and certifications, including qualifying exam fees and continuing education requirements, provided the program meets federal 529 guidelines.

#4: Room, Board, and Living Expenses

529 plans can also help cover many of the day-to-day costs that come with being a student, not just tuition and fees.

For students enrolled at least half-time, qualified expenses generally include on-campus room and board up to the school’s published cost of attendance. Students living off campus may also use 529 funds for eligible housing and food expenses, although the rules are more specific.

In many cases, rent and groceries qualify up to the school’s stated room and board allowance. However, expenses that exceed those limits or discretionary costs like dining out generally don’t qualify. Keeping detailed records and understanding the school’s published cost estimates can help you use these funds more effectively and avoid unintended tax consequences.

#5: Special Education and Support Services

529 plans can now help cover a broader range of services that support a student’s educational needs. In some cases, this includes qualifying educational therapies for students with disabilities, such as occupational, behavioral, physical, and speech-language therapy, when provided by a licensed or qualified practitioner and connected to the student’s education.

Certain tutoring and specialized support services may also qualify if they align with the student’s educational needs, although eligibility depends on federal guidelines and the rules of your specific state plan.

In addition, families can roll 529 funds into an ABLE account for the beneficiary or another qualifying family member. While this provision was originally scheduled to expire at the end of 2025, the OBBBA permanently extended the rule, creating additional flexibility for families planning around disability-related expenses and long-term financial support.

#6: Student Loan Repayment

529 plans can now play a role in helping families manage student debt after graduation. Under the SECURE Act, you can use up to $10,000 per beneficiary over their lifetime to repay qualified education loans, including both federal and private student loans. Families may also use up to $10,000 for each of the beneficiary’s siblings to help pay down their qualified student debt.

This added flexibility can create more options for families with leftover 529 balances or graduates carrying education loans. At the same time, it’s important to coordinate these strategies carefully from a tax perspective.

For instance, if you use tax-free 529 funds to pay student loan interest, you can’t also claim that same interest toward the student loan interest deduction. Thoughtful planning can help you avoid giving up valuable tax benefits unnecessarily.

#7: Roth IRA Rollovers

Thanks to the SECURE Act, families can now roll qualifying 529 assets into a Roth IRA in the beneficiary’s name without triggering income taxes or penalties, subject to several important rules and limitations.

Here are the key guidelines to understand:

• You can roll over up to $35,000 per beneficiary over their lifetime.
• The 529 plan must have been open for at least 15 years before rollovers begin.
• Only the 529 beneficiary can receive the Roth IRA funds.
• Contributions and earnings from the previous 5 years aren’t eligible for rollover.
• Annual Roth IRA contribution limits still apply, so transfers may need to occur over multiple years.
• The beneficiary must have earned income at least equal to the amount rolled over that year.
• The beneficiary must satisfy Roth IRA income eligibility requirements for that year.
• The rollover must occur as a direct trustee-to-trustee transfer to preserve the tax benefits.

Because of these limitations, this strategy often works best when approached gradually over several years as part of a broader long-term planning strategy.

Making the Most of Your 529 Plan Funds

529 plans offer far more flexibility than they once did, making how you use these funds just as important as how much you’ve saved. With the ability to support education, student loan repayment, career development, and even retirement planning, these accounts can play a valuable role across multiple stages of your financial life.

At the same time, each strategy comes with tradeoffs. The timing and structure of withdrawals can affect taxes, cash flow, financial aid considerations, and how efficiently the rest of your plan works together. A coordinated approach can help you use these funds more effectively while avoiding unnecessary complications or missed opportunities.

If you’re unsure how your 529 plan fits into your broader financial strategy, or you want a more thoughtful approach to using these funds, SageMint Wealth is here to help. Our team can help you evaluate these opportunities within the context of your financial plan so you can make informed, confident decisions about what comes next. Contact us to learn more and get started.

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.