United States 529 education savings and federal tax
United States 529 plans have federal tax rules for contributions, qualified education distributions and transfers to a beneficiary’s Roth IRA.
- K–12 qualified expense limit, 2026
- $20,000 per beneficiary per yearIRS, qualified tuition programs
- Roth IRA rollover lifetime limit
- $35,000IRS, qualified tuition programs
Federal tax treatment
Contributions are not federally deductible. Account earnings accumulate tax free, and distributions used for qualified education expenses are not taxable. When distributions exceed qualified expenses, part of the earnings is taxable. IRS, qualified tuition programs (opens in a new tab).
Qualified expenses
Qualifying uses include eligible postsecondary education, registered apprenticeships, certain postsecondary credentialing expenses and limited education-loan repayments. K–12 expenses include tuition, curriculum, books, eligible tutoring, specified examinations, dual enrolment and licensed or accredited disability therapies. The annual K–12 limit across a beneficiary’s plans is $20,000 in 2026. IRS, qualified tuition programs (opens in a new tab).
Roth IRA rollover conditions
A tax-free rollover must transfer directly between trustees to the beneficiary’s Roth IRA. It is subject to the annual Roth IRA contribution limit and a $35,000 lifetime limit. The 529 account must have been open at least 15 years. Contributions and attributable earnings from the preceding five years cannot be rolled over. IRS, qualified tuition programs (opens in a new tab).
Scope
Federal rules only. This guide does not determine an individual distribution’s treatment, state tax benefits, contribution capacity or investment suitability. General information only, not personalised tax advice.