What You Can Actually Spend 529 Money On

The core rule: education expenses at schools the IRS recognizes

A 529 plan lets you withdraw money tax-free to pay for may have access to education expenses at an accredited college, university, trade school, or graduate program. The school must be may be able to access to participate in federal student aid programs — which includes nearly every legitimate institution in the United States, plus many abroad.

The IRS defines may have access to expenses narrowly. Tuition and fees are always covered. Room and board counts, but only if the student is enrolled at least half-time. Books, supplies, and equipment required for coursework are in. A computer and internet access are covered if the student needs them for school. But the expense has to be tied directly to education — not to living expenses that would exist whether or not the student attended school.

If you withdraw money for something that does not meet the IRS definition, you pay income tax on the earnings portion of that withdrawal, plus a 10 percent penalty on the earnings. The contribution itself comes out tax-free, but the growth does not.

Key Takeaways

• Tuition, fees, room and board (for half-time enrollment or more), books, and required equipment are always may have access to expenses.
• A computer, internet access, and up to $35,000 in student loan repayment are covered under current rules, but the rules change and vary by state.
• K-12 tuition at private schools is covered up to $235 per year per student, and up to $35,000 can roll into a Roth IRA under certain conditions.
• Withdrawals for non-may have access to expenses trigger income tax plus a 10 percent penalty on the earnings portion, though the contribution itself is never taxed.
• Some states add their own may have access to expenses on top of federal rules, so check your plan's documentation before withdrawing.

Room and board, computers, and internet access

Room and board is may have access to only if the student is enrolled at least half-time. If your child takes a semester off or drops to part-time status, room and board expenses in that period are not covered. The amount you can withdraw is capped at the school's published cost of attendance for room and board — you cannot withdraw more than the school says it costs, even if you actually spend less.

A computer, printer, and internet access are may have access to expenses if the student needs them for school. The IRS does not require the school to explicitly mandate them, but the expense should be reasonable for the program. A $3,000 gaming laptop for an engineering student is easier to defend than a $4,000 MacBook for a humanities major, though both could be justified depending on the coursework.

Software and equipment required for classes — lab materials, art supplies, musical instruments — count as may have access to expenses. The key word is "required." If the school recommends it or the student wants it but does not need it for a specific course, it does not may have access to.

K-12 private school tuition and 529-to-Roth rollovers

You can withdraw up to $235 per student per year from a 529 plan to pay for tuition at a private K-12 school. This is a federal rule that applies to all 529 plans, though some states have set their own limits. Check your plan's rules before withdrawing.

A newer option lets you roll up to $35,000 from a 529 plan into a Roth IRA in the beneficiary's name, with some restrictions. The money must have been in the 529 for at least 15 years. The annual rollover is capped at the Roth contribution limit for that year (which is $7,000 for 2024, but changes annually). The beneficiary must have earned income in the year of the rollover. This option is useful if your child does not attend college or if you have leftover 529 money after graduation.

Student loan repayment

You can withdraw up to $35,000 from a 529 plan over the beneficiary's lifetime to pay down their federal or private student loans. This is a one-time aggregate limit across all 529 plans for that person — if you have two 529 accounts for the same child, the $35,000 total applies to both combined.

The withdrawal is tax-free as long as the loan is in the beneficiary's name. Parent PLUS loans do not may have access to because they are in the parent's name, not the student's. The money can be used to pay down existing loans or to pay off new loans taken after the 529 plan was opened.

Apprenticeship programs and vocational schools

An accredited apprenticeship program or trade school counts as a may have access to institution if it is may be able to access for federal student aid. This includes programs in plumbing, electrical work, HVAC, welding, nursing, and hundreds of other fields. The school must be recognized by the U.S. Department of Education.

Tuition, fees, books, tools, and equipment required for the program are all may have access to expenses. If the apprenticeship includes a classroom component and a work component, expenses for both are covered. Some apprenticeships are paid (the employer pays the student), but that does not disqualify the program from 529 funding — you can still withdraw money for tuition and materials.

Graduate school and professional programs

A 529 plan covers graduate school tuition, fees, and room and board at any accredited graduate program — law school, medical school, MBA programs, master's degrees, and doctoral programs all may have access to. The same rules apply as for undergraduate education: room and board is covered only if the student is enrolled at least half-time, and the amount is capped at the school's published cost of attendance.

If you have leftover 529 money from undergraduate education, you can use it for the same beneficiary's graduate school without penalty. You can also change the beneficiary to a family member — a sibling, cousin, or even a spouse — and use the money for their education at any level.

What does not may have access to

Room and board for a student living at home does not may have access to, even if the student is enrolled full-time. Transportation and commuting costs do not may have access to. Meal plans are covered only as part of the school's published room and board cost, not if purchased separately. Health insurance, even if required by the school, does not may have access to as a room and board expense.

Tutoring, test preparation, and standardized test fees (SAT, ACT, GRE) do not may have access to. Extracurricular activities, sports fees, and club memberships do not may have access to. Parking permits and student fees that are not part of tuition do not may have access to. If you are unsure whether an expense qualifies, the school's financial aid office can tell you whether it is included in the cost of attendance figure used for federal aid.

State-specific rules and plan documentation

Some states have added their own may have access to expenses on top of the federal list. A few states cover expenses like test preparation or certain professional certifications. Your specific 529 plan's documentation will list what your state allows. Before making a large withdrawal, check your plan's website or call the plan administrator to confirm the expense qualifies under both federal rules and your state's rules.

If you withdraw money and later learn it was not may have access to, you have a limited window to correct it. Some plans allow you to redeposit non-may have access to withdrawals within a short timeframe, but this varies. It is better to verify before withdrawing than to deal with the tax consequences afterward.

Frequently Asked Questions

Can I use 529 money to pay for housing if my child lives off-campus?

Yes, as long as the student is enrolled at least half-time. The amount is capped at the school's published cost of attendance for room and board. If your child lives in a cheaper apartment than the school's estimate, you can still withdraw up to the school's figure, but you cannot withdraw more.

What happens if I withdraw money for something that does not may have access to?

You pay income tax on the earnings portion of the withdrawal, plus a 10 percent penalty on those earnings. The contribution itself is never taxed. If the earnings were $5,000 and you are in the 24 percent tax bracket, you would owe $1,200 in tax plus $500 in penalty, for a total of $1,700.

Can I use 529 money for my child's first apartment after graduation?

No. Once your child graduates or stops being enrolled at least half-time, room and board expenses no longer may have access to. The 529 money can be used for graduate school if your child enrolls, or rolled into a Roth IRA under the new rules, but not for post-graduation living expenses.

Do I have to use all the 529 money before my child graduates?

No. You can leave money in the account and use it for graduate school, or roll it to a family member's education, or roll up to $35,000 into a Roth IRA. If money remains unused, you can change the beneficiary to a sibling, cousin, or other family member at any time.

Can I use 529 money to pay for online college?

Yes, as long as the online program is from an accredited school that participates in federal student aid. Tuition, fees, books, and a computer (if needed for the program) all may have access to. The school's cost of attendance figure will determine the room and board cap, which may be lower for online students.