529 College Savings Plan: Key Facts to Know in 2025

Planning for education expenses can be complex, and the 529 College Savings Plan continues to

be a widely used tool for families looking to prepare for future costs. While the structure of these

plans remains consistent, recent updates to the tax code—such as new Roth IRA rollover

provisions—offer additional flexibility for account holders.

Here are key points to consider when evaluating how a 529 plan might fit into an overall financial strategy. 

1	State Specific Tax Treatment Contributions to a 529 plan may be deductible on state income taxes, depending on the plan and your state of residence. Some states also offer tax parity, allowing a deduction regardless of which state’s plan is used.
2	Tax-Deferred Growth and Tax-Free Withdrawals Investment earnings grow tax-deferred, and qualified withdrawals used for education expenses—like tuition, fees, books, and room and board—are federally tax-free.
3	K-12 and Apprenticeship Program Eligibility Up to $10,000 per year can be used for tuition at K–12 public, private, or religious schools. Plans also allow withdrawals for qualified expenses related to registered apprenticeship programs.
4	Student Loan Repayment Lifetime withdrawals of up to $10,000 per beneficiary (and $10,000 per sibling) can be used to repay qualified student loans, subject to federal limits.
5	Rollovers to Roth IRAs (New for 2024 Onward) Under SECURE Act 2.0, certain unused 529 funds can be rolled over to a Roth IRA in the beneficiary’s name. The rollover is subject to annual Roth contribution limits and a lifetime cap of $35,000, with additional conditions, including the 529 account being open for at least 15 years.
6	No Federal Contribution Limits There are no annual federal contribution limits, but contributions are treated as completed gifts for tax purposes. In 2025, individuals can contribute up to $18,000 per beneficiary without triggering gift taxes (or $36,000 for married couples). A five-year gift tax averaging election is also available.
7	Impact on Financial Aid 529 accounts owned by a parent are typically treated as parental assets for FAFSA purposes, which generally results in a smaller impact on aid eligibility compared to student-owned assets.
8	Beneficiary Flexibility If the original beneficiary doesn't need the funds, account owners may change the beneficiary to another qualifying family member without tax consequences.
9	Investment Options Vary by Plan Plans typically offer a range of portfolios, including age-based or static investment options. The owner can usually make investment changes up to twice per year or when changing the beneficiary.
10	Residency Not Required You are not required to use your home state's 529 plan. However, some benefits—such as tax deductions or credits—may only apply if you use your state’s plan.

Next Steps

If you're considering education planning as part of your broader financial goals, a conversation about 529 plan options may be worthwhile. Click here to schedule a time to review how recent rule changes could apply to your situation and to evaluate how this savings strategy fits within your overall plan.

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This communication is intended for informational purposes only and does not constitute personalized

investment advice or a recommendation. The content herein reflects general educational information

based on current regulations as of 2025 and may not reflect your individual circumstances. Before

making any financial decisions, consult with a qualified financial advisor. All investments involve risk,

including the potential loss of principal. Tax laws are subject to change, and their application may vary

depending on your specific situation.