529 Plan Changes: How These Accounts Can Be More Beneficial for Counselors

H.R. 1, the One Big Beautiful Bill Act, was signed into law in July 2025. Among many other provisions, the changes to 529 plans could positively affect counselors and their financial situation.

Originally, 529 plans were established as state-sponsored, tax-advantaged savings accounts funded with post-tax contributions, allowing investments to grow tax-free when used for qualified education expenses — typically associated with traditional higher education tuition. Withdrawals for these qualified expenses are generally tax-free.

H.R. 1 significantly expanded the definition of qualified education expenses, broadening how these funds can be used. Now, 529 funds can be used for vocational programs, required continuing education, credentialing, tuition, books, fees and supplies. Since counseling is a qualifying program, counselors can now use 529 funds for credentialing programs, continuing education and licensing exams, as well as any supplies needed for those activities.

In addition, H.R. 1 followed the SECURE 2.0 Act, passed in 2024, which allows unused 529 funds to be rolled into a Roth IRA retirement account, subject to applicable limits and conditions. 529 funds can also be used to pay student loans. Previously, changing 529 beneficiaries or transferring unused funds into other types of accounts often incurred a penalty or required paying taxes.

Counselors may benefit from these changes because counseling is a qualifying program for professionals licensed at the state level. For other professions, eligibility may also extend to programs approved by recognized credentialing bodies, included in a state-maintained Workforce Innovation and Opportunity Act Eligible Training Provider List, or listed in the U.S. Department of Veteran Affairs Department’s Web-Enabled Approval Management System. The expanded federal rules only apply to federal taxes, but each state operates differently.

This does not constitute financial advice and is not a substitute for consulting a qualified financial professional.