529 Plan FAQ Sheet

Recent federal updates have expanded the use of 529 plan funds (Qualified Tuition Programs) to include certain professional certification expenses, offering ABA candidates and credential holders with new options to support certification-related costs.

Please note that ABA does not determine whether any expense qualifies for favorable tax treatment under federal or state law. Eligibility for 529 plan withdrawals is determined by applicable law and the terms of the individual plan.

529 Expansion Overview: FAQs

What is a 529 plan?

A 529 plan is a tax-advantaged savings account designed to help pay for education-related expenses. Funds grow tax-deferred, and withdrawals are generally tax-free when used for qualified education costs.

What has changed with 529 plans?

Recent legislative updates expand the potential use of 529 plan funds beyond traditional higher education expenses to include postsecondary credentials — professional certifications, continuing education, industry licenses and workforce training.

Can 529 funds be used for ABA certification related expenses?

Potentially — in many cases, and depending on your state’s 529 plan rules, funds may be used to cover:

• Exam application & retake fees
• Study and preparatory materials
• Continuing education costs

Eligibility depends on applicable federal and state law, the terms of the specific 529 plan, and the nature of the expense. Before withdrawing any funds, individuals should confirm eligibility with their specific plan administrator and a qualified tax advisor.

Can I use leftover 529 funds from my child’s account, if they don’t need them?

In some cases, yes. If a child does not use all the funds in a 529 plan, the account owner may have the option to change the beneficiary to another eligible individual — including themselves.

This means you may be able to:

Depending on applicable law and the rules of the specific 529 plan, reassign unused 529 funds to yourself and, in some circumstances, use those funds to cover qualifying professional certification expenses. Rules and tax implications can vary, so it is important to confirm:

• Whether your 529 plan allows a beneficiary change
• How the change must be completed

Before making any changes or withdrawals, consult your plan’s guidelines and your plan administrator.

What should I do before using 529 funds for certification expenses?

Before using 529 funds, it is strongly recommended that you:

• Confirm whether your specific plan allows these uses (plans vary by state)
• Speak with a tax or financial advisor about potential implications
• Review IRS and plan guidance to ensure compliance

Where can I learn more about expanded 529 regulations?

Expanded 529 Savings Plans Now Cover Professional Certifications and Credentials

6 Ways to Use Your 529 Account for Expanded Purposes

Disclaimer

This material is provided by the American Bankers Association (“ABA”) for general educational and informational purposes only. It is not intended to constitute, and should not be relied upon as, legal, tax, financial, investment, accounting, or other professional advice. Information concerning 529 plans, qualified education expenses, professional certification expenses, beneficiary changes, and plan eligibility is subject to change and may vary based on federal law, state law, IRS guidance, and the terms of an individual’s specific 529 plan. ABA does not sponsor, administer, or provide advice regarding any 529 plan and makes no representation or warranty that any particular expense, program, activity, or withdrawal will qualify for favorable tax treatment. Individuals should consult their 529 plan and seek qualified legal, tax, or financial advisors before making decisions regarding contributions, beneficiary changes, withdrawals, or use of plan funds.