Using Your 529 Savings Account
529 Plans are flexible and accessible.
When your child is ready to take the next step, The Education Plan® will be ready too. You can use your college savings plan for any qualified higher education expense, including tuition, room and board, fees, books, computers, and more.
The Education Plan 529 is flexible. Use your 529 Plan savings for more than traditional 4-year college expenses, including:
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Tuition and fees
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Books
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Supplies and equipment
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Room and board for beneficiaries attending on at least a half-time basis.
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Computer technology, equipment, internet access
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Expenses for educational special needs services
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Up to $20,000 a year for K-12 tuition and expenses*
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Transfers up to $19,000 a year to an ABLE account for the beneficiary*
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Apprenticeship expenses*
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Up to $10,000 for student loan repayment*
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Roth IRA Rollovers
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Credentialing Expenses
What if….?
The future can’t be predicted. That’s why the flexibility of a 529 Plan is so important.
What if I need my 529 savings for a nonqualified purpose?
You can take the savings out of The Education Plan any time and for any reason. However, if the money is not used to pay for qualified education expenses, earnings may be subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal tax penalty on earnings.
What if my child receives a loan or scholarship?
Loans and scholarships usually don’t cover all education costs. You can use your 529 savings to pay for qualified expenses that aren’t covered by other sources.
What if my child doesn’t go to college?
529 savings can be used at accredited technical and vocational schools too, so your child isn’t limited to a traditional four-year college.
If your child doesn’t use the 529 Plan savings, you have options including: you can keep the money in the account in case your child changes his or her mind in the future, change the account beneficiary or or roll over unused funds into a Roth IRA.
The “lifetime” of a 529 plan
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No contribution required to open an account
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Your money is invested in the investment options you choose
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Contributions can be made anytime and easily, including recurring and gift contributions
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The funds in your 529 can experience the power of compounding over the lifetime invested
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When funds are ready to be used for a qualified use, like college or K-12 expenses, withdrawal the funds needed
1 The Plan is neither FDIC insured nor guaranteed and may lose value.
2 When withdrawals are used for other purposes, the earnings portion of the withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal tax and the recapture of all previous New Mexico tax deductions taken for contributions to an account.
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
