September 2026 brings broader federal uses for 529 college savings plans, a higher K–12 withdrawal limit, updated issuer terms, and a separate child-savings option. Key takeaways: review newly eligible expenses, match withdrawals to payments, and compare 529 flexibility with the restrictions on Trump Accounts. A 529 plan is a tax-advantaged account designed for qualified education costs. Michigan's governor also proclaimed September 2026 "College Savings Month," highlighting the state's prepaid MET plan, direct-sold MESP plan, and broker-sold MI 529 Advisor Plan, according to the State of Michigan proclamation.
Table of Contents
- Which education expenses are newly covered?
- How did the K–12 withdrawal limit change?
- What changed in current issuer terms?
- Can unused 529 money move to a Roth IRA?
- How do Trump Accounts compare with 529 plans?
Which education expenses are newly covered?
Federal law has expanded the K–12 expenses that qualify for tax-free 529 withdrawals. For distributions made after July 4, 2025, eligible costs include curriculum, books, online educational materials, qualifying tutoring, admissions and Advanced Placement tests, dual-enrollment fees, and certain therapies for students with disabilities. The same law extends 529 eligibility beyond conventional college degrees. Qualified expenses can now include tuition and required supplies for eligible postsecondary credential programs, credential testing, and required continuing education.
These changes make existing savings useful for more education paths. A family could potentially use 529 money for qualifying trade credentials or required professional testing instead of reserving every dollar for a four-year degree. Eligibility still matters. Families should confirm that the particular program, service, or material meets the federal definition before requesting a withdrawal. The statutory details appear in Public Law 119–21.
How did the K–12 withdrawal limit change?
For tax years beginning in 2026, the annual federal ceiling for qualified K–12 withdrawals increased from $10,000 to $20,000 per beneficiary. The limit applies across all 529 programs, not separately to each account. That distinction matters when relatives maintain multiple accounts for one student.
Two accounts do not create two $20,000 federal limits. Account owners should coordinate withdrawals so the combined amount does not exceed the beneficiary's annual ceiling. The expanded list of K–12 costs also gives families more ways to use the higher limit. However, a larger permitted withdrawal does not automatically make every education-related purchase qualified.
What changed in current issuer terms?
Utah's my529 issued an updated program description on March 25, 2026. It added two Dimensional single-fund portfolios, began accepting credit cards for Gift Program contributions, revised fee and benchmark tables, and set Utah's state tax-benefit percentage at 4.45%, according to the my529 issuer announcement. Its current terms also say qualified withdrawals must occur in the same period that the related expenses are paid.
Nonqualified withdrawals are taxable and may trigger penalties. Before taking money out, account owners should keep a simple documentation file containing: Issuer changes can affect investment choices, fees, contribution methods, and recordkeeping. Read the current program description for your own plan rather than assuming another state's terms apply.
- The invoice, bill, or receipt
- Proof of payment
- The withdrawal confirmation
- The date of both the expense and withdrawal
- Evidence that the expense qualifies
Can unused 529 money move to a Roth IRA?
A beneficiary may roll qualifying 529 funds into a Roth IRA in that beneficiary's name. The transfer must go directly between trustees; withdrawing the money personally and redepositing it is not the permitted method. Several limits apply.
The account must have existed for at least 15 years, recent contributions face a five-year aging rule, transfers count toward the applicable annual IRA limit, and lifetime rollovers cannot exceed $35,000. These restrictions mean the Roth option is a limited outlet for eligible unused funds, not an unrestricted way to convert education savings into retirement money. Confirm the account's age and contribution history before initiating a transfer under IRS Topic 313.
How do Trump Accounts compare with 529 plans?
Trump Accounts became fundable on July 4, 2026. Eligible children may receive a one-time $1,000 federal seed contribution, while authorized annual contributions are capped at $5,000. They are not spendable college accounts during childhood.
Withdrawals generally cannot begin before the year the child turns 18; afterward, traditional-IRA-like tax rules apply, according to the IRS 2026 guidance. That timing makes the two vehicles different tools. A 529 can cover qualifying education expenses under its distribution rules, while a Trump Account generally keeps the money unavailable until the child reaches the specified year. Families deciding between them should first ask when the money may be needed.
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