Why 529 Plans Deserve Another Look…
A lot of people have avoided 529 plans in the past.
And honestly, that hesitation often made sense.
A 529 is a tax-advantaged account designed to help save for education. The catch was how rigid those dollars could be.
If your child didn’t go to college…
If they didn’t use all the funds…
Or if you needed the money for something else…
You could face income taxes and a 10% penalty on earnings.
That made it feel like you had to guess the future correctly or risk getting it wrong.
But recent rule changes have started to address some of those concerns.
It may be worth taking a second look.
Here’s what’s different:
They now allow you to create a back-up plan.
You can roll up to $35,000 of unused 529 funds into a Roth IRA for the beneficiary, subject to certain conditions.1,2 That means the money doesn’t have to sit unused or trigger penalties.
It’s no longer just about college.
529 funds can now be used for career training, certifications, and trade programs. So the plan can still work even if the path looks different.3,4
You have more flexibility earlier on.
Now you can withdraw up to $20,000 per year for K–12 expenses, and it’s not limited to tuition.3,5
What this could mean for you:
- You’re not locked into a single outcome
- How you use the plan can shift without triggering tax consequences
- Saving for education doesn’t have to feel all-or-nothing
- And if you’re a grandparent, 529 plans can still be a tax-efficient way to support a child’s future, with options like superfunding to contribute more upfront
This doesn’t mean a 529 plan is the right fit for everyone.
But it does mean the tradeoffs look different than they used to.
If you ruled this out before, it may be worth revisiting.
If you want to talk through how these changes could apply to your situation, I’m here.
Jon Melton
Melton & Company
President and Founder
Peachtree City / Canton / Alpharetta
Sources
- Nerd Wallet, 2026 [URL: https://www.nerdwallet.com/retirement/learn/secure-act]
- Saving for College, 2026 [URL: https://www.savingforcollege.com/article/roll-over-529-plan-funds-to-a-roth-ira]
- Congress.gov, 2025 [URL: https://www.congress.gov/bill/119th-congress/house-bill/1/text]
- Saving for College, 2026 [URL: https://www.savingforcollege.com/article/big-beautiful-bill-education-savings-529-plans]
- Saving for College, 2026 [URL: https://www.savingforcollege.com/article/what-you-can-pay-for-with-a-529-plan]
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