Besides paying for a traditional college degree, 529 plan funds can be used for K–12 tuition, vocational and trade school costs, registered apprenticeship expenses, student loan repayment, and rollovers into a Roth IRA for the beneficiary. Each use has its own rules and dollar caps, and a withdrawal that misses those rules becomes a non-qualified distribution: ordinary income tax on the earnings portion plus a 10% federal penalty on those earnings.
K–12 Tuition
You can withdraw up to $10,000 per year, per beneficiary, to pay tuition at an elementary or secondary school. Public, private, and religious schools all qualify.1Internal Revenue Service. 529 Plans: Questions and Answers
The cap covers tuition only. Books, supplies, room and board, and transportation for a K–12 student are not qualified expenses, and any 529 dollars spent on them become taxable with the 10% penalty on earnings.2Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs Anything you withdraw above $10,000 in a single year for one beneficiary’s K–12 tuition is also non-qualified. Keep the tuition invoices.
State Tax Conformity
The K–12 rule is federal. Roughly a dozen states, including California, New York, Illinois, and Oregon, do not treat K–12 tuition as a qualified 529 expense for state income tax purposes. In those states a K–12 withdrawal can be federally tax-free and still generate state tax on the earnings. Nine states have no personal income tax and so avoid the mismatch. Check how your state handles it before taking a K–12 distribution.
Vocational and Trade Schools
A 529 plan works for a welding certificate, a cosmetology program, or a community college credential the same way it works for a bachelor’s degree. Any postsecondary institution that participates in federal student aid programs is eligible, which sweeps in most vocational schools, technical colleges, and community colleges.3Internal Revenue Service. Eligible Educational Institution
Qualified expenses at these schools match those at a university: tuition, required fees, books, supplies, and required equipment. Computers, printers, educational software, and internet service also qualify when the beneficiary is enrolled, and the school does not have to require them; the only exclusion is equipment used mainly for entertainment.1Internal Revenue Service. 529 Plans: Questions and Answers
Room and board qualify too, but only if the student is enrolled at least half-time. That is a real difference from K–12, where tuition is the only qualified line.1Internal Revenue Service. 529 Plans: Questions and Answers
If you are not sure a program counts, look for the school in the Department of Education’s Federal School Code list or the Database of Accredited Postsecondary Institutions and Programs. If it appears in either, it is eligible.3Internal Revenue Service. Eligible Educational Institution
Registered Apprenticeships
The SECURE Act of 2019 added apprenticeship costs to the qualified list. Fees, books, supplies, and required equipment for the program all qualify for tax-free withdrawals, and for trades that call for specialized tools or safety gear, those count.2Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs
The program has to be registered and certified with the U.S. Department of Labor under the National Apprenticeship Act. An informal mentorship or an employer’s in-house training that is not federally registered does not qualify, and 529 dollars used for it will be taxed and penalized. You can confirm a program’s status through the Department of Labor’s apprenticeship finder. There is no separate dollar cap on apprenticeship expenses.
Student Loan Repayment
The SECURE Act also opened 529 funds to student loan payments, covering principal and interest on federal and private education loans.2Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs This is a useful landing spot for money left over after graduation.
The limit is $10,000 lifetime, per borrower, not per year. Once $10,000 of 529 money has gone toward one person’s loans, no more loan payments qualify for that person. Each sibling of the beneficiary has a separate $10,000 lifetime limit, so a leftover balance can be used across a family. Step-siblings and half-siblings count as siblings for this rule.2Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs
One coordination rule catches people. If you pay student loan interest with a 529 distribution, you cannot also claim that same interest under the student loan interest deduction on your return. Pick one.
Rollover to a Roth IRA
Starting in 2024, SECURE Act 2.0 allowed leftover 529 money to be moved into the beneficiary’s Roth IRA without income tax or the 10% penalty.4Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs Every one of these conditions has to be met:
- The 529 account has been open for at least 15 years.
- Contributions made in the last five years, and the earnings on them, are not eligible to roll over.
- The rollover in any year cannot exceed that year’s Roth IRA contribution limit. For 2026 that limit is $7,500 for individuals under 50, and any regular Roth contributions the beneficiary makes that year reduce the amount available for the rollover.5Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026; IRA Limit Increases to $7,500
- The lifetime cap for a single beneficiary is $35,000.
- The beneficiary must have earned income at least equal to the amount rolled over in that year.
Because of the annual cap, moving the full $35,000 takes at least five years. It is a long-term option for a child who did not need the full balance, not a way to unwind an account quickly.
Changing the Beneficiary
Before taking a non-qualified withdrawal, consider switching the account to a different beneficiary. You can change the designated beneficiary at any time with no federal tax or penalty, as long as the new beneficiary is a qualifying family member.1Internal Revenue Service. 529 Plans: Questions and Answers
The IRS definition of family is broad. It includes the current beneficiary’s spouse, children, parents, siblings (including step- and half-siblings), grandparents, grandchildren, aunts, uncles, nieces, nephews, first cousins, and the spouses of any of those relatives.2Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs A parent can even name themselves if they are heading back to school.
When the 10% Penalty Is Waived
Some non-college situations remove the 10% penalty on a non-qualified withdrawal, though the earnings portion is still subject to ordinary income tax:
- Tax-free scholarship or fellowship: you can withdraw up to the scholarship amount penalty-free.
- Attendance at a U.S. military academy: you can withdraw up to the annual cost of that attendance penalty-free.
- Disability of the beneficiary.
- Death of the beneficiary.
The scholarship case is the one families most often misread. A scholarship does not make the matching 529 withdrawal fully tax-free; it only waives the 10% add-on. Income tax on the earnings still applies.