Money saved in a 529 plan can be used, tax-free, to cover various education-related expenses.
- Qualified expenses include tuition and fees associated with college or graduate school, as well as books, computers and related equipment, and room and board costs.
- Qualified expenses also include tuition expenses at elementary, middle, and high schools (private, public, or religious). This amount is limited to $10,000 per year, per beneficiary.
- The SECURE Act of 2019 expanded qualified expenses to now include costs of apprenticeship programs and student loan repayments as well. The amount that can be used to pay student loan repayments is limited to $10,000 per beneficiary.
Check out this U.S. New & World Report article for more details on what qualified expenses you can pay for with a 529 plan:
U.S. New & World Report - Qualified Expenses You Can Pay for With a 529 Plan
Note that if you withdraw money from your 529 plan to pay for something that is not considered a qualified expense, any part of the withdrawal that is made up of earnings on contributions will be taxed as ordinary income and could incur a 10% federal penalty. However, the penalty may be waived under certain circumstances, such as if the beneficiary receives a scholarship, veteran's educational assistance, or other nontaxable education payment that is not a gift or inheritance, or the disability or death of the beneficiary.