Fund Your Next Career, Retirement Hobby, or Side Gig with a 529 Plan
A growing number of Baby Boomers are choosing to complete or continue their education in retirement rather than hit the links or mahjong table. And why not? As a recent article published on Nasdaq.com noted, in addition to keeping abreast of recent trends and expanding their social circle, going back to school can give retirees the opportunity to learn new skills to engage in side hustles like web design or affiliate marketing.
And it’s not just retirees. A great way to get out of a career rut is to go back to school and take courses in something you may be more interested in.
Those looking at a career change or side hustle may not have unlimited resources to pay for courses. That’s why many are looking for flexible solutions to cover expenses. And when it comes to flexible financial solutions for education, few match the versatility of a 529 account with The Education Plan®. Here are a few key questions and answers if you’re looking to fund your next act:
Can you use 529 funds to cover your own educational expenses?
Yes! You can use money in a 529 plan for your education now or for the future. The funds can be used to take courses at a qualified college or trade school, towards a degree or for a certificate program. You can find a list of qualified institutions by using the U.S. Department of Education’s accreditation search tool.
Can you use unused funds from the 529 plan that you set up for your kids?
Absolutely! If you have leftover funds in an existing 529 plan that you own for a child, grandchild, niece, nephew, etc., you can decide to transfer and use those funds for your own education expenses. To make this happen, you will need to name yourself the beneficiary of the 529 account.
Can you set up a 529 plan for yourself?
Yes! Setting up a 529 plan for yourself is just as easy as setting up one for someone else. Just make yourself the beneficiary of the funds.
What happens to your 529 plan if you decide not to go back to school?
If you change your mind and decide not to go back to school, don’t worry. You can always change the beneficiary of the plan you set up for yourself to a child, grandchild, niece, nephew, sibling, or any other eligible member of the family (even in-laws!) without paying tax on the transfer.
What expenses are covered by 529 funds?
You can use 529 funds to pay for tuition, books, university fees, computers, and even software, as long as these goods and services are used as part of your education. You can see the expansive list of qualified expenses here.
What expenses aren’t covered?
You won’t be able to use funds from your 529 plan to pay for transportation and travel costs, application and testing fees, health insurance, sports expenses or health club dues, or to pay for the mortgage on a house, condo, or other residential property while you are enrolled in college. A mortgage payment is a payment on a loan and not a payment of housing costs. As such, it is not a qualified higher education expense.
Are contributions to a 529 plan tax deductible?
If you are a New Mexico resident, contributions to your 529 account are eligible for deduction from your New Mexico state taxable income each year. What’s more, the earnings in your account are not taxed and withdrawals are tax-free as long as they are used for qualified expenses. Some states have tax benefits for contributions to an out-of-state 529 plan. Before investing in a 529 plan, we recommend consulting a tax advisor to determine your state’s tax benefits and if it imposes any limitations on the use of 529 contributions.
Is there an age limit?
There are no time or age limits on using a 529 plan. Money can be kept in a 529 plan indefinitely. There is also no age limit on contributions to a 529 plan. You’re never too old to start school. And you’re never too old to be the beneficiary of a 529. Any U.S. citizen or resident 18 years or older with a valid Social Security number or a Taxpayer Identification Number (TIN) can open a 529 savings account, and you do not need to be related to the beneficiary. You can even open an account for yourself. The account owner must be at least 18 years of age and both the account owner and beneficiary must be a citizen or resident of the United States with a Social Security number or TIN.
There’s more!
Visit our Learning Center for a wealth of detailed information on the tax-advantaged benefits of 529 plans, including details on how to open an account, how to save, which family members qualify to receive these benefits (you might be surprised), when and how to take withdrawals, how to choose or change a plan beneficiary, and much more.
Consider opening a tax-advantaged account with The Education Plan to help fund your next act today.
Frequently Asked Questions
A 529 plan is a tax-advantaged investment account that is designed to grow savings for future education expenses for a specified beneficiary. 529 plans offer unique benefits and features that make them an appealing strategy for education related saving.
A 529 plan can be used for “qualified educational expenses.” For federal tax purposes, qualified educational expenses include:
- Tuition and fees at accredited higher education institutions
- Books
- Supplies and equipment
- Room and board for beneficiaries attending on at least a half-time basis.
- Computer technology, equipment, and internet access
- Up to $10,000 a year for K-12 tuition and expenses (Limit increase to $20,000 in 2026)
- Expenses for educational special needs services
- Transfers to an ABLE account for the beneficiary (transfer subject to annual limit)
- Apprenticeship expenses
- Up to $10,000 for student loan repayment
- Credentialing expenses and certification programs
- Roth IRA rollover for the beneficiary
If you're not sure if an expense is considered "qualified," we recommend consulting with a tax professional or advisor. Unqualified expenses will be treated like ordinary income: state and federal taxes will apply, with a 10% federal penalty for withdrawals from your 529 plan used to pay for them.
New Mexico residents can deduct contributions to The Education Plan from their state taxable income each year. This includes contributions made to an account that you are not the account owner of.
You cannot deduct contributions from federal income taxes.
Any person at least 18 years old with a valid Social Security Number (SSN) or Tax Identification Number (TIN) can open a 529 account. The account holder chooses the investment options, designates a beneficiary, and requests the distribution of funds.
The cost of college continues to rise, including tuition, housing, food and supplies, so it’s important to begin saving as soon as possible. You can learn more about how much a typical college education costs on our Cost of College page. It’s never too early or too late to start.
The Education Plan offers a variety of investment options to fit you and your family’s needs, risk tolerance and goals. You can see all of the available investment portfolios on the investments page.
Yes, you can use up to $20,000* a year to cover tuition and expenses for K-12 education.
Qualified K-12 expenses include:
- Tuition (public, private, and religious)
- Curriculum materials, books (including digital/online) and instructional materials
- Tutoring and instructional classes**
- Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission
- Dual enrollment program fees
Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical, and speech-language therapies
*Starting in tax year 2026. The annual limit is $10,000 in tax year 2025 and permitted for tuition only.
**Tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and—
(i) is licensed as a teacher in any State,
(ii) has taught at an eligible educational institution,
or (iii) is a subject matter expert in the relevant subject.
You can open an account with The Education Plan online or by mailing in the enrollment form. In order to open an account, you will need the following information:
- Your social security number or TIN
- Your address
- Your bank account information (in order to fund the account)
- The beneficiary’s social security number or TIN
- The beneficiary’s birthday
-The beneficiary’s address
