529 plans may be used to pay for post-secondary education at thousands of eligible institutions, including trade schools and apprenticeship programs. Distributions from your 529 account can be used to cover books, supplies, and equipment—even room and board in many cases.
There is a wide range of trade—or vocational—schools nationwide, offering diverse programs. Trade schools typically take less than two years to complete and may be much cheaper than traditional colleges. In fact, the average cost of a trade school is approximately $33,000.1 Compare that to the more than $88,000 you could pay at a public college for a four-year degree as an in-state resident.2
Good jobs abound
There are many well-paying careers that don’t require a traditional bachelor’s degree, including MRI technician (median salary $73,424), aircraft mechanic ($64,085), real estate appraiser ($57,013), and electric lineman ($72,509).3 Job growth for many trades is high and expected to remain so through the rest of the decade. Here is just a sample of some of the growth opportunities in various fields.
Opportunities for growth4
Most trade schools do require a high school diploma or GED. The Federal School Code Lookup Tool provides information on which trade schools are eligible for qualified 529 distributions. Your child can also visit apprenticeship.gov to research qualified programs.
And, while thinking about your child’s options, be sure to sit down with your financial professional who can help you make decisions on affordability and can help you implement a plan, including the use of your 529 education savings account.
1 “The Average Cost of Vocational School in USA 2020,” Vocational Training HQ, January 2020. 2 “Trends in College Pricing and Student Aid 2020,” CollegeBoard, August 2020. 3 “The 24 Highest-Paying Trade Jobs—No Bachelor’s Degree Required,” SkillPointe, June 2021. 4 Employment projections program, U.S. Bureau of Labor Statistics, April 2021.
Consult your financial, tax, or other professional to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances. Some states do not consider 529 withdrawals for primary and secondary school education, student loan repayments, and apprenticeship costs to be qualified withdrawals and, therefore, the investor may be subject to penalties.
State tax laws and treatment may vary. Earnings on nonqualified distributions are subject to federal and applicable state income taxes and a 10% federal penalty tax. This material does not constitute financial, tax, legal, or accounting advice, is for informational purposes only, and is not meant as investment advice. Please consult your tax or financial professional before making any decision.
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