Did You Know that 529 Savings Plans are not just for college?

529 plan savings accounts are one of the best ways to save for your child’s education, because the earnings are tax-deferred and any distributions are tax-free when used for their education. But did you know you don’t have to wait until they go to college to use funds from these accounts? 

Since the Tax Cut and Jobs Act was signed into law in 2017, funds from a 529 plan can be distributed tax-free for K-12 tuition, up to $10,000 annually per child, at public, private, and religious elementary or secondary schools. 

This past July, the One Big Beautiful Bill Act expanded these tax-free options to include not just tuition but also books, materials, testing fees, dual enrollment fees, educational therapies, and tutoring costs. Even better, beginning in 2026, the maximum tax-free withdrawal rises to $20,000 per child. 

This new flexibility can be a valuable tool to help offset today’s education costs while still building for college. With the recent strength in the equity markets, reviewing your 529 funding strategy now, could open up new opportunities for your family. 

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.​
 

If you’d like to explore how these updates fit into your current education savings plan, we’d love to help. Reach out to us at https://www.connected-wealth.com/next-steps.