Why 529 Plans Aren't a Waste, Even If Your Kid Skips College

Whether you're waving a "Don’t Tread on Me" flag or driving a Subaru with coexist bumper stickers, one thing unites all parents; we want to set our kids up for a future that doesn't involve drowning in debt or boomeranging back into our basement.

And for a long time, 529 plans seemed like a gamble. What if your kid never goes to college? What if they decide to become a plumber, start a business, or hit it big on YouTube? Then what? All that money, wasted, right?

Actually, no.

Thanks to recent legislative changes, especially the One Big Beautiful Bill (OBBB) and the SECURE 2.0 Act, 529 plans have become one of the most flexible, family-friendly financial tools out there. Even if your child never steps foot on a college campus.

In this article:

Our Kid Might Skip College And We're Fine With That

1. 529 Plans Cover More Than Just College Now

2. Leftover Funds Can Be Reused or Rolled Over

3. Grandparents Can Help Without Messing Up Financial Aid

4. 529s Come With Estate and Gift Tax Perks

5. Whay About MAGA Accounts?

The New 529 Strategy: Cover All the Paths

Our Kid Might Skip College And We're Fine With That

My husband and I are both leaning heavily toward encouraging blue-collar careers for our son. Not because we think less of higher education, but because we’re watching AI and automation swallow entire white-collar industries.

My writing career dried up when content mills and AI started cranking out free, fast copy. And I’m not the only one:

• Junior marketers and SEO writers are being replaced by templates and automation.

• Friends in graphic design and paralegal jobs are being replaced by cheap software.

• Coders and data analysts are sweating as AI eats up their contracts.

• Customer service reps are getting sidelined by chatbots.

• Even some therapists are worried about AI mental health apps. In fact, I built my own AI therapistbecause it’s more affordable and accessible.

Electricians and plumbers? Still in demand. Probably always will be.

So, we’ve more focused on building our son’s Roth IRA. Those funds can be used for education if needed, but they also give him long-term flexibility. Meanwhile, his grandparents have taken the lead on funding a 529 because they still see college as the surest path to success.

And honestly, these new rules make that 529 even more powerful for our overall family strategy. It’s no longer just a college fund. It’s a generational wealth-building tool. I break that down more in How to Create Generational Wealth: The 529 Edition.

1. 529 Plans Cover More Than Just College Now

Thanks to OBBB, 529 accounts are no longer just for four-year universities.

• K–12 Expenses: You can now use up to $20,000 per year (previously $10K) for private school tuition, homeschooling materials, tutoring, dual-enrollment, and more.

• Vocational & Apprenticeship Programs: 529s cover trade school, workforce certifications, and job training programs. If your kid wants to become a licensed electrician, welder, or HVAC tech, the account can fund that path too.

• Student Loan Repayment: You can use up to $10K to repay student loans for the beneficiary or their siblings.

2. Leftover Funds Can Be Reused or Rolled Over

The biggest fear with 529s used to be the dreaded 10% penalty if your child didn’t use the funds for education. That fear has faded.

• Change the Beneficiary: You can move the account to a sibling, cousin, or even back to yourself.

• Roth IRA Conversion: Thanks to the SECURE 2.0 Act, you can now roll up to $35,000 from a 529 into a Roth IRA for your child, provided the account is at least 15 years old. It’s a slick way to give your kid a retirement head start.

3. Grandparents Can Help Without Messing Up Financial Aid

The new FAFSA changes mean that family (or anyone else, really) can contribute to a 529 plan without it showing up as income that reduces financial aid eligibility. That used to be a loophole that penalized well-meaning generosity. Now it’s fixed.

4. 529s Come With Estate and Gift Tax Perks

These benefits are also smart tools for building long-term wealth as a family.

• Gift Tax Exclusion: You can contribute up to $18,000 a year to a 529 plan without it counting against your lifetime gift tax exemption. And if you want to give more, you can front-load five years' worth—$90,000 total—all at once.

• Estate Planning Benefits: That money is considered a "completed gift," so it’s out of your taxable estate, but you still manage the account and how it's spent. It’s like handing off wealth without actually handing over control.

Let’s say a grandparent wants to help their grandchild with future expenses. Rather than leaving an inheritance with an estate tax burden, they can help fund the grandchild’s future in a way that’s protected, purposeful, and potentially tax-free. That’s the kind of move that turns a simple college fund into a legacy plan.

5. What About MAGA Accounts?

The OBBB also introduced what some are calling MAGA or Trump accounts: $1,000 seeded at birth (for kids born between 2025 and 2028), with room for $5K/year in parental contributions and a $2.5K employer match.

They can be used for:

• Education

• Buying a first home

• Starting a small business

That said, MAGA accounts don’t have the same tax advantages as a 529 plan, especially when it comes to state tax deductions or long-term growth. Still, for families that want a multipurpose option, they’re worth exploring in tandem.

The New 529 Strategy: Cover All the Paths

This isn't just about college anymore. It's about:

• Using laws written for billionaires to help your middle-class family build generational wealth.

• Protecting your savings from future regret.

• Letting your kid find their way, whether that’s with a laptop or a pipe wrench.

The new 529 rules take a lot of the guesswork out of saving for your child’s future. The money you saved doesn’t disappear, even if they skip college, even if they join a trade, even if they pivot to something no one’s invented yet. It works harder for you now. Finally.