If you are planning on any kind of future education, whether that is a four-year college, a trade school, or a professional certification, the 529 plan is one of the most powerful tools in your kit. It is designed to reward you for saving for your education by letting your money grow and be spent completely tax-free.

What is a 529 Plan?

A 529 is a state-sponsored investment account. You and a parent (the account owner) put money in, and that money is invested in the stock market.

• The Big Benefit: As long as you use the money for "Qualified Education Expenses," you don't pay any federal or state taxes on the profits you made.

• Not Just for College: You can also use this money for K-12 private school tuition (up to $20,000 per year starting in 2026), trade schools, and even paying back up to $10,000 in student loans.

Essential Facts for You and Your Parents

To be fully informed, review these four specific 2026 rules with your parent or guardian:

1. High Contribution Limits

Unlike other accounts, there is no annual limit on how much you can put into a 529. Each state has a "lifetime limit," which is often over $500,000. However, to avoid extra paperwork, most families stay under the annual "gift tax" limit (which is $19,000 per person in 2026).

2. Favorable Financial Aid Rules

On the FAFSA (the form used for college financial aid), a 529 plan is usually treated as a parent asset. This is great news! The government only expects you to use about 5.6% of parent assets for school each year, compared to the 20% they expect from student-owned accounts like UTMAs.

3. The "Leftover Money" Solution (The Roth Rollover)

A common "thinking barrier" is: "What if I don't go to college?" As of 2024, if you have money left over in your 529, you can roll over up to $35,000 (lifetime limit) into a Roth IRA for yourself tax-free. This turns your "college fund" into a "retirement fund."

• The Catch: The 529 account must have been open for at least 15 years, and you must have a job with earned income to do the rollover.

4. Expanded Expenses in 2026

The government recently made 529s even more flexible. You can now use the funds for:

• Tutoring and Test Fees: SAT/ACT prep and academic tutoring now qualify.

• Vocational Training: Credentials for things like welding, plumbing, or cosmetology.

• Specialized Services: Educational therapies, including support for ADHD or learning differences.

How to Move Forward with Your Parents

Since a parent or guardian usually owns this account while you are the "beneficiary," it is a team project.

Things to discuss together:

• Your Future Path: Even if you aren't sure about a four-year degree, talk about whether trade school or a professional certification is in your vision.

• Choosing a State Plan: You don't have to use your own state's plan! Some states offer tax breaks for residents, but you should compare fees and investment options across different states.

• The "Successor" Owner: Ask your parent who would manage the account if something happened to them. This ensures your education fund is always protected.