What else can 529 funds be used for, if not college?
What if your 529 plan is overfunded or your child wants to be a TikTok star and doesn’t plan to go to college? No fear, 529 plan funds can be used to pay for qualified education expenses, not just college. The definition of what a qualified education expense is has changed over the years to cover quite a bit of ground. A good understanding of what it entails can help maximize the use of your funds. Talking to a financial professional can be helpful while making these decisions.
Let’s look into other ways you can use your 529 funds.
Can 529 funds be used for private school?
Yes. You can use up to $10,000 a year per student for qualified K–12 tuition at public or private elementary and secondary schools.
Can 529 funds be used for trade school?
Yes. If your child wants to be a chef or a hairdresser, funds could be used in 529 plan accounts to pay for the training. 529 plan funds aren’t just for two- or four-year colleges. 529 plan funds can be used to pay for trade or vocational courses as well, as long as the school or teaching institution is eligible for federal student aid. You can check online to see if the school participates in the U.S. Department of Education’s federal student aid program.
Can 529 funds be used for graduate school?
Yes. If your children want to continue their education after college, they can pay for the graduate school expenses with their 529 plan funds. As with undergraduate programs, the educational institution must be eligible for federal student aid.
Can 529 funds be used for school-related qualified expenses?
Yes. Not just tuition, 529 funds can be used to pay for room and board fees, off-campus housing up to the cost of room and board on campus, campus meal plan, textbooks, supplies up to a school set budget, computers, software, internet, and special-needs equipment. The definition and budget for each listed could differ for different states and educational institutions. Please confirm before claiming it as a qualified expense.
Can 529 funds be used for student loans?
Yes. In December 2019, the passage of the SECURE Act ensured that 529 education savings plan account holders can withdraw up to a lifetime limit of $10,000 tax free for student loan payments of the account beneficiary and their siblings.
Can 529 funds be rolled into a ROTH IRA account?
Yes. As per the SECURE Act 2.0 legislation expected to take effect on January 1, 2024, rollovers can be made to the Roth IRA of the 529 account beneficiary; however, there are some caveats and you can learn more here.
Can 529 plan beneficiaries be changed?
Yes. The beneficiary of a 529 plan account can be changed. Additionally, if you have leftover assets, you can change the beneficiary to another family member. Consult a professional opinion for best results.
Talk to a financial professional
529 accounts are becoming more adaptable and talking to a financial professional can help you optimize the funds for all your goals.
Important Disclosures
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.
John Hancock Investment Management Distributors LLC is the principal underwriter and wholesale distribution broker-dealer for the John Hancock mutual funds, member FINRA, SIPC.
John Hancock Retirement Plan Services LLC offers administrative and/or recordkeeping services to sponsors and administrators of retirement plans. John Hancock Trust Company LLC provides trust and custodial services to such plans. Group annuity contracts and recordkeeping agreements are issued by John Hancock Life Insurance Company (U.S.A.), Boston, MA (not licensed in New York), and John Hancock Life Insurance Company of New York, Valhalla, New York. Product features and availability may differ by state. Securities are offered through John Hancock Distributors LLC, member FINRA, SIPC.
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