By Max Michalczik CFP® & Kekoa Pfau ChFC®

A 529 plan is one of the best ways to save for education. However, to make the most of it, you need to know what the IRS considers a qualified education expense in 2026. Using your 529 plan for anything else can trigger taxes and penalties–it pays to be precise.

529 Plan Eligible Expenses

Qualified education expenses are costs the school requires for enrollment or attendance. In 2026, these generally include:

Tuition and fees – The amount required to enroll at a college, university, vocational school, or other eligible institution.

Books, supplies, and required equipment – Textbooks, lab materials, software, or tools required for classes.

Room and board – Housing and meals for students enrolled at least half time. Limits are set by the school. Dorms, apartments, and other living costs generally qualify.

Required technology – Computers, software, or other devices necessary for coursework if required by the school.

Special needs expenses – Costs for students with disabilities that are necessary for attending school.

K through 12 tuition – Up to ten thousand dollars per year can be used for tuition at eligible elementary or secondary schools.

Apprenticeship programs – Fees, supplies, and required equipment for registered apprenticeships.

Student loan repayments – Up to ten thousand dollars per beneficiary for qualified student loans, including siblings.

529 Plan Non-Educational or Non-Qualified Withdrawals

Some expenses feel like education costs but are not covered. These include:

Transportation – Bus passes, flights, parking, and commuting costs.

Health insurance and medical expenses – Even if required by the school.

Extracurricular or social fees – Clubs, sports tickets, or optional programs.

Personal items – Travel, phones, headphones, or electronics that are not required by the school. Using 529 funds for nonqualified expenses usually triggers federal income tax on the earnings plus a ten percent penalty.

What Has Changed Recently with 529 Plans

You may have heard about rolling unused 529 funds into a Roth IRA. That rule started January 1, 2024 under the SECURE Act 2.0. It allows up to $35,000 in lifetime rollovers to a Roth IRA for the beneficiary, subject to rules and limits. The 529 account must have been opened at least fifteen years for the named beneficiary, and annual Roth contribution limits still apply.

This does not expand what counts as a qualified education expense. It simply provides an option for excess funds that would otherwise be nonqualified.

Summary of What are The 529 Plan Qualified Expenses and Withdrawal Rules in 2026

Using a 529 plan for qualified education expenses keeps your withdrawals tax-advantaged. The key is knowing what qualifies and planning ahead. Tuition, required fees, books, supplies, equipment, and room and board for students enrolled at least half time are generally safe. Everything else should be reviewed carefully to avoid taxes and penalties.

At The Freyr Group, we help families understand the rules, make strategic contributions, and use their 529 plans in a way that supports long-term financial goals. Knowing what counts can make your education savings plan more effective and less stressful.

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This content is for educational and informational purposes only and should not be considered personalized investment, tax, or legal advice. The information provided is general in nature and may not apply to your individual circumstances. All investments involve risk, including the potential loss of principal.
The Freyr Group, LLC does not provide legal or tax advice. Any references to tax-related topics are provided for general informational purposes only, and individuals should consult with a qualified tax professional regarding their specific situation.
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