By Jason Griffith
Watching your child walk across the graduation stage is a moment you’ll never forget—full of pride, joy, and maybe even a few happy tears. It also marks the end of a significant financial chapter: the college tuition years.
But what if there’s still money left in your child’s 529 college savings plan?
It’s more common than you might think. And the good news? You’ve got options.
- Keep Supporting Education
If your child is heading to graduate school, the 529 funds can keep doing their job. These accounts can be used to pay for qualified expenses like tuition, fees, and housing at most accredited graduate programs.
- Change the Beneficiary
No grad school? No problem. You can change the beneficiary on the account without taxes or penalties—as long as the new person is a family member. That includes siblings, cousins, in-laws, and even yourself.
Thinking about brushing up on some skills or going back to school for fun or professional growth? The 529 can help with that too.
- Pay Off Student Loans
529 plans now allow up to $10,000 to be used toward student loan repayment for the beneficiary—and up to $10,000 per sibling as well. It’s a great way to ease the burden of debt post-graduation.
Just make sure the loans qualify under IRS guidelines, and double-check your state’s specific tax rules before withdrawing.
- Roll It Into a Roth IRA
Thanks to the SECURE 2.0 Act, you can roll over up to $35,000 of unused 529 funds into a Roth IRA for the beneficiary—penalty-free and tax-free, as long as a few conditions are met:
- The 529 has been open at least 15 years
- Annual Roth contribution limits apply
- The beneficiary must have earned income that year
This could be a powerful way to jump-start your child’s retirement savings.
- Take the Money—And the Penalty
Not ideal, but sometimes necessary. If you use 529 funds for non-education purposes, you’ll owe income tax and a 10% penalty on the earnings portion of the withdrawal.
In some cases—like a small leftover balance or urgent financial need—paying the penalty may be worth it.
Final Thought
Leftover 529 funds aren’t a mistake—they’re an opportunity. Whether it’s funding further education, helping with debt, or building future savings, your planning has created flexibility.
If you’d like help reviewing your options, let’s talk. We’re here to help you make the most of every dollar—just like you’ve done all along.
Congratulations to the Class of 2025—and to the parents who made it possible.
