H.R. 1, recently signed into federal law, expands the qualified distributions of 529 programs. These additions offer new options for people saving in a 529 account for their children’s K-12 tuition, for tutoring and testing – that must meet certain requirements, for their own career credentials and continuing education, and for the permanent provision to roll a 529 account to and ABLE account. So now your savings in Ohio 529 CollegeAdvantage can do even more.

Please speak with a financial advisor, a tax professional, and/or the IRS directly regarding these changes impacting 529 Plans.

The new 529 expanded uses include:

K-12 Changes

• Annual Limit: The annual limit on the use of 529 plan assets for K-12 expenses increases from $10,000 to $20,000, beginning January 1, 2026.
• Qualified Expenses Expanded: (Effective as of July 5, 2025)
  • Curriculum and curricular materials;
  • Books or other instructional materials;
  • Online educational materials;
  • Tuition for tutoring or educational classes outside of the home:
    • Only if the tutor or instructor is not related to the student and is licensed as a teacher in any state, has taught at an eligible educational institution, or is a subject matter expert in the relevant subject
  • Fees for a certain nationally standardized achievement test, advanced placement exam, or college admission exam (e.g. SAT, ACT) tests;
  • Fees for dual enrollment in an institution of higher education; and
  • Certain educational therapies for students with disabilities (e.g. occupational, behavioral, speech-language).

Credentialing

• Expansion of Qualified Higher Education Expenses to include “Qualified Postsecondary Credentialing Expenses” effective for distributions beginning July 5, 2025, including:
  • Tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary in a “recognized postsecondary credential program,” including if such expense would, if incurred in connection with enrollment or attendance at an eligible educational institution (e.g. a four-year college), be treated as a qualified higher education expense;
  • Fees for testing required to obtain or maintain a “recognized postsecondary credential;” and
  • Fees for continuing education if required to maintain a “recognized postsecondary credential.”
• Definition of “Recognized Postsecondary Credential Program:”  A "recognized postsecondary credential program" means any program to obtain a “recognized postsecondary credential” if:
  • The program is included on a state’s eligible training provider list under Section 122(d) of the Workforce Innovation and Opportunity Act (WIOA);
  • The program is listed in the WEAMS (Web-Enabled Approval Management System) public directory maintained by the Department of Veterans Affairs;
  • An examination developed or administered by an organization widely recognized for providing reputable credentials in the occupation is required to obtain or maintain the credential, and such organization recognizes the program as providing training or education that prepares individuals to take the examination; or
  • The program is identified by the Secretary of the Treasury, after consultation with the Secretary of Labor, as being a reputable program for obtaining a recognized postsecondary credential for purposes of the provision’s amendments to Code section 529.
• Definition of “Recognized Postsecondary Credential”:
  • An industry-recognized postsecondary employment credential, including any postsecondary employment credential that is:
    • issued by a program that is accredited by the Institute for Credentialing Excellence, the National Commission on Certifying Agencies, or the American National Standards Institute;
    • included in the Credentialing Opportunities On-Line (COOL) directory of credentialing programs (or successor directory) maintained by the Department of Defense or by any branch of the Armed Services;
    • Identified by the Treasury Secretary in consultation with the Labor Secretary.
  • A certificate of completion of an apprenticeship registered and certified with the U.S. Department Of Labor under the National Apprenticeship Act;
  • An occupational or professional license issued or recognized by a state or the federal government; and
  • A credential defined in the Workforce Innovation and Opportunity Act.

Rollovers from 529 Plan to ABLE Plan

• There previously was a sunset provision to be able to rollover funds from a 529 Plan to an ABLE Plan that was due to expire on December 31, 2025.
  • This provision has been removed and is no longer set to expire on December 31, 2025.

There are still many clarifications and operational issues that will need to be resolved relating to these recent changes. Ohio 529 will provide more information once it is available.

Again, please speak with a tax professional and/or the IRS directly regarding the changes impacting 529 Plans.

Since 1989, Ohio 529 has been helping families across the nation save for their children’s education after high school. Ohio 529 covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate program nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at CollegeAdvantage.