Can You Open a 529 Plan for Yourself?

A 529 plan is a state-sponsored savings account with tax advantages for education expenses, named after section 529 of the Internal Revenue Code. You can open a 529 plan for yourself by naming yourself as both the account owner and the beneficiary. This structure allows you to save for your own schooling, whether that involves returning for a new degree, attending graduate school, or pursuing vocational training.

Key Decisions and Account Setup

When you open a 529 plan for yourself, you act as both the account owner and the beneficiary. As the owner, you control the funds, including making investment decisions, authorizing withdrawals, and changing the beneficiary to another family member if your plans change. The beneficiary is the individual whose educational expenses can be paid for with the account’s funds.

A key decision is choosing which state’s 529 plan to use. You are not restricted to the plan in your state of residence, as most are open to anyone. The primary reason to consider your home state’s plan is the potential for a state income tax deduction or credit on your contributions, a benefit offered by over 30 states.

An out-of-state plan might be a better fit if it offers lower fees or more suitable investment options. If your state does not offer a tax deduction or has no state income tax, the financial incentive to stay in-state is removed. Comparing these factors across different state plans is an important step before committing your funds.

While there are no federal annual contribution limits, contributions are treated as completed gifts for tax purposes. This means contributions are subject to the annual gift tax exclusion, which is $19,000 for 2025. Each state also sets its own lifetime contribution limit for its plans, which can range from approximately $235,000 to over $550,000 per beneficiary.

Funding the Plan and Tax Implications

A 529 plan offers two main federal tax benefits. First, your money grows on a tax-deferred basis, so you do not pay annual income taxes on investment earnings as they accumulate. Second, withdrawals are completely free from federal income tax as long as the funds are used for qualified education expenses.

Inside the plan, your contributions are invested in a portfolio of funds, such as mutual funds or exchange-traded funds (ETFs). Many plans offer age-based or target-date portfolios that automatically become more conservative as your planned enrollment date approaches. This is done by shifting from stocks to bonds and cash equivalents over time.

Making Qualified Withdrawals

You can take tax-free distributions from the account to cover Qualified Higher Education Expenses (QHEEs). The IRS defines these broadly to include tuition, mandatory fees, books, supplies, and equipment required for enrollment at an accredited institution. Room and board costs also qualify, provided you are enrolled at least half-time.

For room and board, if you live in university-owned housing, the qualified amount is the actual cost. For off-campus housing, the allowance is limited to the amount the school includes in its official cost of attendance. Additionally, a lifetime limit of $10,000 per individual can be withdrawn tax-free to repay qualified student loans.

It is important to coordinate your 529 withdrawals with other education-related tax benefits. You cannot use tax-free 529 funds to pay for the exact same expenses that you use to claim other tax benefits, such as the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC). Claiming multiple tax benefits for the same expense is prohibited by the IRS.

Managing Unused Funds

If you have money remaining after your education, you can take a non-qualified withdrawal. The portion of the withdrawal from your original contributions is returned tax-free and penalty-free. The earnings portion, however, will be subject to ordinary income tax and a 10% federal penalty.

A more tax-efficient option is to change the beneficiary to an eligible family member, such as a spouse, child, or sibling. As the account owner, you can make this change without incurring taxes or penalties, allowing the funds to be used for another person’s education.

The SECURE 2.0 Act allows for a tax-free rollover from a 529 plan to a Roth IRA for the beneficiary. This option has several requirements. The 529 account must have been open for at least 15 years, and contributions made within the last five years are not eligible for rollover.

There is a lifetime maximum of $35,000 that can be rolled over. The amount rolled over annually is subject to that year’s Roth IRA contribution limit. The beneficiary must also have earned income at least equal to the rollover amount for that year.