Early Life Investments
A Family Financial Head Start
“The best time to build lifelong money habits is when you are young. The second-best time is today.”
“The best time to build lifelong money habits is when you are young. The second-best time is today.”
From the Blog — July 31, 2026 · 9 min read
The same bill that created Trump Accounts quietly doubled the 529’s K-12 limit, covered homeschooling, expanded career credentialing, and made the ABLE rollover permanent. Here is what changed.
On July 4, 2026, the One Big Beautiful Bill Act (OBBBA) did two things most families noticed: it created Trump Accounts and funded them with a free $1,000 federal seed. But the same legislation did something to the 529 plan that most families have missed — and if you have a 529 open, or are deciding whether to open one, the changes deserve your attention.
The 529 is no longer just a college savings vehicle. As of 2026, it is a lifelong education account covering:
Here is what changed, what it means for your family, and the one move that unlocks all of it.
The most immediately useful change: the annual limit for K-12 qualified withdrawals doubled from $10,000 to $20,000 per student. Families using 529 funds for private school tuition, specialized academies, or therapeutic schools have twice the tax-free headroom they had before the OBBBA.
The expanded list of eligible K-12 expenses also grew beyond tuition to include tutoring, standardized test preparation fees, educational therapies (including support for learning differences such as ADHD), and educational software. Expenses that previously required out-of-pocket spending can now be covered with tax-free 529 withdrawals.
For the first time, homeschooling expenses are a qualified 529 distribution at the federal level. Eligible costs include curriculum materials, textbooks, educational software, and online learning resources. If your family homeschools, the 529 can now serve as a tax-advantaged funding mechanism for what was previously a fully out-of-pocket expense.
This is a meaningful change for the roughly 3.3 million homeschool families in the U.S. — but it comes with an important caveat that we return to in the state conformity section below. Federal qualification does not automatically mean your state will treat the withdrawal as tax-free.
This may be the most significant long-term change in the OBBBA for families with teenagers who are uncertain about the four-year college path. Before the OBBBA, a 529 earmarked for college that went unused faced an unpleasant set of options: redirect to another beneficiary, take a non-qualified distribution with taxes and penalties, or roll up to $35,000 into the beneficiary’s Roth IRA (if the account was 15+ years old).
The OBBBA adds a fourth path that families have been asking for: spend it on a career credentialing program. Eligible programs now include:
Eligible expenses mirror what applies to traditional higher education: tuition and fees, books, required equipment, supplies, and testing fees. A child who graduates high school and enrolls in a welding certification program can draw on the family’s 529 for the full cost of training — no penalties, no taxes, no beneficiary change required.
The 529 was built for one path — College.
The OBBBA built a ramp for every other path your child may choose.
For families with children with disabilities, the OBBBA resolved a source of ongoing uncertainty. Tax-free rollovers from 529 plans to 529A ABLE accounts had been set to expire on December 31, 2025. They are now permanent.
Two additional ABLE provisions were also made permanent alongside the rollover. ABLE-to-Work lets an employed ABLE beneficiary contribute their own compensation above the standard annual cap. And ABLE contributions remain eligible for the Saver’s Credit — the Retirement Savings Contributions Credit — which gives lower-income savers a tax credit worth a percentage of what they put in.[2] For a working ABLE beneficiary, that is a credit on money they were saving anyway.
One more change worth knowing, though it came from separate legislation rather than the OBBBA: as of January 1, 2026, the ABLE eligibility window widened considerably. The disability must now have had an onset before age 46, up from age 26 — which makes several million more people ABLE-eligible than were a year ago.[3] If you looked at ABLE accounts before and were told the age of onset ruled you out, that answer may have changed.
For families who have built up a 529 balance for a child whose disability limits their ability to use the funds for education, the permanent rollover path means that money can now move to a 529A ABLE account without time pressure or legislative reauthorization risk.
None of the OBBBA changes affected the most powerful long-term feature of the 529: the SECURE 2.0 Roth rollover. Under SECURE 2.0, up to $35,000 in unused 529 funds can roll tax-free into the beneficiary’s Roth IRA — no income tax, no penalty — once two conditions are met: the 529 account has been open for at least 15 years, and the beneficiary has earned income in the year of the rollover.
That 15-year clock starts at account opening, not at the child’s birth. A family that opens a 529 the month their child is born starts the clock immediately. A family that waits until the child is six gives up six irreplaceable years on a clock that cannot be restarted.
Combined with the new OBBBA flexibility — homeschooling, credentialing, doubled K-12 limit — there is almost no scenario in which a well-funded 529 goes unused. Every expansion reduces the risk that the money won’t find a purpose. And if it still doesn’t? The Roth rollover is the exit with the best tax profile in the code.
California has not conformed to the federal expansion and continues to prohibit 529 withdrawals for K-12 and homeschooling expenses at the state level. A withdrawal that is federally tax-free may still trigger California state income tax. New York has conformed. Most other states fall somewhere in between, with conformity status still being determined for some of the newer provisions.
Before making withdrawals for newly eligible expenses — especially homeschooling, career credentialing, or the expanded K-12 uses — verify your state’s conformity position. SavingForCollege.com maintains a regularly updated state-by-state breakdown, and your 529 plan administrator is the safest first call before taking a non-standard distribution.
| Change | Before OBBBA | After OBBBA |
|---|---|---|
| K-12 annual withdrawal limit | $10,000/student | $20,000/student |
| Homeschooling expenses | Not qualified | Qualified (federal; check state) |
| Career credentialing | Not qualified | Qualified (CDL, trades, CPA, bar, WIOA apprenticeships) |
| 529 → 529A ABLE rollover | Temporary (expired 12/31/2025) | Permanent |
| ABLE-to-Work contribution | Temporary | Permanent |
| Saver’s Credit for ABLE contributions | Temporary | Permanent |
| SECURE 2.0 Roth rollover ($35K) | Intact | Intact (unchanged) |
Most financial planning advice for families stops at “open a 529 and contribute regularly.” That is the right starting point. What gets less attention is the compounding flexibility that has quietly accumulated in the account over the last two years: the SECURE 2.0 Roth rollover in 2022, the Trump Account Roth conversion opportunity in 2026, and now the OBBBA expansion that covers almost every educational path a child might take.
Sound retirement planning frameworks direct household income toward retirement before addressing kids’ college savings — and that sequencing is right. The parents’ financial foundation matters. What is equally sound is starting the 529 early enough that the Roth rollover clock is already running when your child reaches their teenage years and decisions about college versus career are still being made. Opening it now costs nothing meaningful. Waiting costs years on that clock.
The education pages walk through the 529 in more detail, including how it fits alongside the Trump Account, the custodial Roth IRA, and the teen brokerage account. The family financial stack post covers the full layering order from birth to 18.
Open a 529 if you don’t have one. If you do, you have more flexibility than you did a year ago. The $20,000 K-12 limit, the homeschooling coverage, the career credentialing expansion, and the permanent ABLE rollovers all reduce the risk that the money you’ve saved won’t get used. And the Roth rollover clock — the reason to open the account even when college feels uncertain — is running regardless of which OBBBA feature you end up using years from now.
Check your state’s conformity status before taking a non-standard withdrawal. Everything else works in your favor.