529 Savings Accounts Now Cover Job Certifications: "Freedom to Invest in Tomorrow's Workforce Act" Expands Options

The "Freedom to Invest in Tomorrow's Workforce Act" just changed the game for 529 savings accounts. Previously, these accounts were strictly for college expenses. Now, they can be used for a much wider range of job training and certification programs.

Leveling Up Your Career, Tax-Free

This bill fundamentally expands what counts as a "qualified higher education expense." It's no longer just about traditional college degrees. Now, 529 funds can cover tuition, fees, books, supplies, and even the equipment needed for "recognized postsecondary credential programs." (SEC. 2). Think of it like this: if you're a mechanic needing a specific certification to advance, or a coder looking to get certified in a new language, your 529 can now help pay for it.

Real-World Wins

This opens up a lot of doors. For example, a veteran transitioning to civilian life could use their 529 to cover the costs of a project management certification, as long as it's listed in the Department of Veterans Affairs' WEAMS Public directory (SEC. 2). Or, a budding electrician can use their 529 to help with the costs of their apprenticeship, provided it's registered with the Secretary of Labor (SEC. 2). Even those already in a career can benefit. The bill specifically allows 529 funds for continuing education courses needed to maintain a credential (SEC. 2). So, if your professional license requires ongoing training, your 529 can help cover those costs, too.

The Fine Print (and a Potential Wrinkle)

The bill casts a pretty wide net when defining what counts as a "recognized" credential. It includes programs listed under the Workforce Innovation and Opportunity Act, those recognized by credentialing organizations, and even programs identified by the Secretary of Education as "reputable." (SEC. 2). This broad definition is generally a good thing, providing flexibility and options. However, it's worth keeping an eye on how this plays out. It will be important to ensure that the programs people are investing in with their 529 funds are actually high-quality and lead to real job opportunities.

Overall, this change makes 529 plans a much more versatile tool for career development, whether you're just starting out, switching fields, or looking to level up in your current job. It's a significant shift that recognizes the changing nature of work and the growing importance of skills-based training.