Education Planning After the One Big Beautiful Bill Act: Key 529 Plan Changes, #270

Paying for education is a major expense for many families, so I’m breaking down why 529 plans remain the preferred way to save for college, thanks to their tax advantages and flexible growth.

I unpack updates, such as increased limits for K-12 tuition withdrawals, expanded uses for trade and vocational schools, and the new ability to roll funds into ABLE accounts for individuals with disabilities. 

Plus, learn about the new Trump accounts, the option to roll over leftover 529 funds into your child’s Roth IRA, and strategies to make the most of your education savings.

Whether you’re a parent, grandparent, or simply curious about planning for future expenses, this episode is packed with actionable insights to help you build a successful financial future for your family.

You will want to hear this episode if you are interested in...

• [00:00] The One Big Beautiful Bill Act and its impact.
• [03:00] The two types of 529 plans - prepaid tuition and savings plans.
• [04:06] Paying for K through 12 tuition and out of the 529 plan up to $20,000 per year.
• [04:31] Wider Usage for Post-Secondary Expenses.
• [06:20] 529 plan rollovers to ABLE accounts.
• [08:52] Comparison between TRUMP accounts and 529 plans.
• [09:33] 529 to Roth IRA conversions.

Maximizing the Power of 529 Plans

Education expenses, whether for college or trade school, are among the largest financial commitments families face.

Recent changes under the “One Big Beautiful Bill Act” have brought new flexibility and opportunities to the popular 529 savings plans, making it easier for parents, grandparents, and guardians to invest in the futures of their loved ones. 

529 plans are tax-advantaged investment accounts designed to help families save for future education costs. Investment growth within the account is tax-deferred, and withdrawals are tax-free when used for qualified education expenses.

This compounding, tax-sheltered growth can make a huge difference over 15 to 18 years, leading up to a child’s college enrollment.

There are two main types of 529 plans:

Prepaid Tuition Plans: Lock in today’s tuition rates at specific colleges or state institutions to avoid the impact of future tuition increases, which often rise more than 5% per year.

Savings Plans: Flexibly invest contributions with the ability to use funds at a wide range of educational institutions across the country.

Key Legislative Updates in the One Big Beautiful Bill Act

1. Doubling K-12 Tuition Withdrawals

Before the new legislation, families could withdraw up to $10,000 annually for K-12 tuition expenses. The One Big Beautiful Bill Act increases this limit to $20,000 per year starting January 1, 2026. 

2. Expanding Qualified Expenses for K-12

The act now permits withdrawals for a broader range of K-12-related expenses, not just tuition. As of July 5th of this year, 529 account owners can use funds for:

• Books and instructional materials
• Online educational content
• Professional tutoring
• Standardized testing fees (e.g., SAT, ACT)
• Educational therapies for children with disabilities

3. Supporting Trade and Technical Education

Not every rewarding career requires a four-year degree. The legislative updates now allow 529 withdrawals for accredited post-secondary programs like HVAC certifications, cosmetology, apprenticeships, or trade schools.

These must be programs recognized by the Workforce Innovation and Opportunity Act, lead to a military credential, or carry federal/state government approval. This opens the door for practical, career-focused education to be funded just as efficiently as traditional college.

Other Savings Options

Also introduced under the act is the new “TRUMP account,” which may qualify children born between 2025 and 2028 for a $1,000 government contribution, with annual after-tax contributions up to $5,000.

However, unlike a 529, a TRUMP account's assets are transferred directly to the child at age 18. Many may still prefer the flexibility and parental control of a 529, but the option to use both accounts and secure extra government funding adds another layer of planning potential.

Perhaps one of the most exciting new features: If a 529 account has been open for at least 15 years, up to $35,000 can be rolled, subject to annual Roth IRA limits, into a Roth IRA in a child’s name.

This brilliant move allows any leftover college savings to start building long-term, tax-free retirement wealth for your child, giving them a valuable head start.

For families supporting someone with a disability, the ABLE (Achieving a Better Life Experience) account remains a vital tool, now bolstered by the ability to make permanent rollovers from 529 accounts.

Eligible for those whose disability began before age 46 (up from age 26 next year), ABLE accounts protect benefit eligibility while allowing more robust financial support for care, therapy, and independence.

Planning ahead isn’t just about numbers; it’s about opening doors for the next generation.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Download my entire book for FREE 
• Workforce Innovation and Opportunity Act

Connect With Morrissey Wealth Management 

www.MorrisseyWealthManagement.com/contact

 

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