Navigating Education Expenses: What's Covered Under Your 529 Plan

Callum Bedos
January 26, 2024
4 min read

Navigating the world of educational savings can be a journey full of questions. One of the most versatile tools in this journey is the 529 plan. Commonly known for its role in college savings, the 529 plan's utility extends far beyond just college tuition. In this article, we'll uncover some of the lesser-known, yet equally valuable uses of 529 funds.

Before diving into the alternative uses, let's briefly recap what a 529 plan is. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs.

Traditionally associated with college expenses, recent changes have expanded their versatility.

  1. Education Related Supplies and Services:Beyond tuition, 529 funds cover expenses like textbooks, computers, internet access, and software, as long as they are used for educational purposes. This coverage is crucial in today's digital learning environment.
  2. Online Courses and Trainings: A great alternative (and often more afffordable alternative) to traditional two and four year colleges is undertaking online courses and accreditations. If these courses are provided by an eligibile educational institution, then tuition and fees could also be used from a 529.
  3. K-12 Education Expenses:One significant expansion of the 529 plan is its applicability to K-12 education. Parents can now use these funds for tuition expenses at private, public, or religious schools, up to $10,000 per year. This change opens up opportunities for families to invest in their children's education from an earlier stage.
  4. Apprenticeship Programs:Recognizing the changing landscape of education and career preparation, 529 funds can now be used for fees, books, supplies, and equipment required for participation in registered apprenticeship programs. This inclusion acknowledges the value of hands-on learning and vocational training.
  5. Student Loan Repayment:In a significant development, 529 plans can now be used to repay student loans. This feature adds a layer of flexibility, allowing beneficiaries or their siblings to manage student debt more effectively.
  6. RIA Rollover: Starting in 2024 you can now rollover any extra funds in a 529 to a qualified retirement account. There are some rules though, including that you need to have owned the 529 account for at least 15 years and the named owner of the RIA must be the same as the Beneficiary of the 529. The annual Roth RIA contribution limit also applies, which for 2024 is $7,000, meaning you can’t rollover more than that from your 529 in any one year.

The truth is that despite the pages and pages of explanations in publications like the IRS Publication 970, there is still no good way to be absolutely sure on what qualifies and what doesn’t.

That is, until now. This problem is exactly why we built 529 Purchase Protection - a service that allows you to be 100% certain what you claim as a qualified expense is exactly that. Our platform enables you to send in your receipts and certify them as eligible. This means that we will provide you with documentation and support for an IRS audit and in the case the IRS disagrees with us, we will cover any taxes and penalties!

Read more about 529 Purchase Protection on our website.

Disclaimer:This article is for informational purposes only and does not constitute financial or legal advice. Please consult with a financial advisor for advice specific to your situation.

Other related articles

  1. Savings for College - 529 Qualified Expenses: What Can You Use 529 Money for?
  2. Fidelity - How to spend from a 529 college plan
  3. US News - Qualified Expenses You Can Pay for With a 529 Plan
  4. Merril - What expenses can a 529 education savings account cover?
  5. Forbes - What Are 529 Plan Qualified Expenses?
  6. CFNC - The Ultimate List of Qualified 529 Expenses: How to Use Your Funds
  7. The Education Plan - 529 Qualified Expenses: More Than Just Tuition
  8. The College Investor - What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
  9. LendingTree -  529 Qualified Expenses: What You Can Use a 529 Plan For

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