Education costs continue to climb across the U.S., and for high-net-worth families, planning ahead has become an essential part of a broader wealth-management strategy. A 529 plan remains one of the most effective tools for preserving family wealth while covering future education expenses. In 2025, the average published annual cost of attendance, including tuition, fees, and typical room and board for full-time undergraduate students is approximately:
- Public four-year in-state: $24,000
- Public four-year out-of-state: $44,000
- Private nonprofit four-year: $57,000
Understanding how 529 plans work—and the new rules taking effect in 2025 and beyond—can help families make the most of these tax-advantaged savings opportunities.
What is a 529 Plan?
A 529 plan is a tax-advantaged education savings account that helps families prepare for future education costs. It offers:
- Tax-free growth on investments inside the account
- Tax-free withdrawals for qualified education expenses
- Estate planning benefits by reducing taxable estate values
Qualified Education Expenses in 2025
In 2025, funds from a 529 plan can be used for:
- Tuition, fees, books, supplies, and equipment for college or vocational school
- Room and board for students enrolled at least half-time
- Computers, software, and internet access for college students
- Special needs services related to enrollment
- Registered apprenticeship programs
- Up to $10,000 lifetime for student loan repayment
- Up to $10,000 per year for K-12 tuition at public, private, or religious schools
- Expanded K-12 coverage in 2025 for books, curriculum, tutoring, and standardized test fees
- Postsecondary credential programs
Not covered: transportation, health insurance, and entertainment expenses.
New Flexibility: 529-to-Roth IRA Rollovers
One of the most exciting changes under the SECURE 2.0 Act is the ability to roll over unused 529 funds into a Roth IRA for the beneficiary. This solves a common concern: “What if my child doesn’t use all the funds in their 529 plan?”
- Lifetime rollover limit: $35,000
- Annual limit: Roth IRA contribution limit ($7,000 in 2025)
- Requirements:
- 529 account open for at least 15 years
- Beneficiary must have earned income equal to the rollover amount
- Contributions within the last 5 years are ineligible
This feature helps families avoid penalties on unused funds and can give beneficiaries a head start on retirement savings.
Gift Tax Rules for 529 Contributions in 2025
Contributions to a 529 plan count as gifts for tax purposes.
- Annual gift tax exclusion: $19,000 per recipient ($38,000 for married couples)
- Front-loading option:
- You can contribute up to five times the annual exclusion in one year—$95,000 for individuals or $190,000 for married couples
- This is treated as if you spread the gift evenly over five years for tax purposes, giving your contribution more time to grow tax-free
Looking Ahead to 2026
Several important changes are anticipated for 529 plans in 2026:
- The K-12 expense limit doubles to $20,000 per student per year for tuition, books, tutoring, and educational therapies
- 529 funds will be allowed for credentialing programs, licensing exams, and continuing education
- Rollovers to ABLE accounts will become permanently allowed for beneficiaries with disabilities
Why 529 Plans Are More Valuable Than Ever
A 529 plan is more than just a savings account—it’s a strategy. Tax-free growth and withdrawals help your money work harder for education costs. Recent changes make these plans even more flexible, covering K-12 expenses and career programs. And, if funds go unused, leftover savings are turned into retirement security by rolling over into a Roth IRA.
These opportunities are powerful, but they’re also complex. Having experienced advisors ensures you maximize your tax benefits, avoid mistakes, and align your plan with your family’s long-term goals.
Ready to make the most of your 529 plan? Contact Boulay’s Estate and Trust team to explore how a 529 plan can fit into your strategy.
Andrew Kremer Law offers estate legal services as part of their affiliation with Boulay.