529 Plans in 2026: New Rules Make College Savings Even Better
529 education savings plans have received major upgrades, making them more flexible and valuable than ever for families saving for education.
What Is a 529 Plan?
A tax-advantaged investment account for education. Contributions grow tax-free, withdrawals are tax-free for qualified expenses including tuition, room and board, books, and K-12 tuition up to $10,000/year.
New Roth IRA Rollover Rule
Unused 529 funds can roll into a Roth IRA for the beneficiary. Lifetime limit of $35,000, account must be open 15+ years. This eliminates the over-funding risk that previously held families back.
State Tax Benefits
Over 30 states offer deductions or credits for contributions. Savings range from $100 to $1,000+ annually depending on your state and contribution amount.
How Much to Save
Target one-third of costs through savings, one-third from income during college, one-third from aid and scholarships. For state schools, $250-400 monthly from birth covers a significant portion.
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