For years, 529 plans were viewed as simple college savings tools. You saved, the money grew tax-free, and you used it later for tuition and qualified higher-education costs. But recent legislative changes have expanded how flexible these accounts can be — and many families are revisiting how a 529 fits into their long-term goals.

In this article, we’re breaking down the three biggest updates you need to know.

1. Roth IRA Rollovers From Unused 529 Funds

Thanks to the SECURE Act 2.0, families now have a way to repurpose leftover 529 dollars without facing taxes or penalties.

Here’s what’s new:

• You can roll up to $35,000 (lifetime limit) from a 529 plan into a Roth IRA for the same beneficiary.
• The 529 must have been open at least 15 years.
• Annual Roth IRA contribution limits still apply, so the rollover may happen over several years.

This is a powerful option if a child or grandchild doesn’t need the full 529 balance for education. You’re essentially giving them a head start on retirement — funded with dollars that have already grown tax-free.

2. Expanded K–12 Flexibility (Starting 2026)

Beginning January 1, 2026, families can use up to $20,000 per student, per year for K–12 expenses. This includes:

• Private school tuition
• Educational programs
• Specialized learning services
• Other qualifying K–12 needs

This is a significant expansion compared to the more limited K–12 rules in place today. Families with near-term education expenses may be able to reduce out-of-pocket costs by strategically using their 529.

3. Career Training, Credentials & Continuing Education

529 plans are now more aligned with real-world career paths. They can be used for:

• Vocational training and trade programs
• Professional certifications
• Career advancement coursework
• Adult education programs
• Certain tutoring or specialized instruction

This reflects the reality that not every student follows a traditional four-year college route — and that many adults return to training or certification programs throughout their careers.

Smart Questions to Consider Before Using These New Options

With more flexibility comes more strategy. Here are the key questions we encourage families to think through:

✔ Do you anticipate leftover funds in the 529?

If so, the Roth rollover could be a way to avoid waste — but only if the timing rules are met.
Planning ahead is essential.

✔ Do you have K–12 expenses coming up?

The $20,000 annual limit is generous, but drawing too heavily early may leave less available for college or training later.
Match withdrawals with long-term goals.

✔ Will your child (or beneficiary) pursue certifications or career changes?

New allowed expenses may be used strategically to support trade school, credentialing programs, or ongoing professional development.

Key Dates to Know

• January 1, 2026 — New K–12 withdrawal rules go live.
• Now — If you want to use a Roth rollover in the future, your 529 must meet the 15-year requirement. If it hasn’t been opened yet, the clock starts when you establish the account.

Bottom Line

There is no one-size-fits-all answer for how to use a 529 plan. These new options can be extremely valuable, but only when aligned with your family’s goals, tax planning, and long-term financial picture.

If you’d like help thinking through how these changes apply to your situation, our team at Clarity Wealth is here to guide you. Let’s look at your goals and build a strategy that uses every available opportunity.