H.R. 1 introduced an important new feature to 529 plans, expanding their usefulness beyond traditional college expenses. Now, distributions from a 529 account can be used for qualified postsecondary credentialing expenses (QPCEs). These expenses apply to programs that help students and workers gain recognized credentials, certifications, or licenses needed for professional advancement.

This change was designed to give families and individuals more flexibility in how they use 529 savings, not limiting them to more traditional two-year and four-year college degrees. By allowing 529 funds to cover credentialing costs, individuals can pursue specialized skills and credentials aligned with today’s workforce demands.

A qualified postsecondary credentialing expense includes tuition, fees, books, supplies, and equipment required for participation in a recognized credential program. It also includes fees for testing and continuing education if those are necessary to obtain or maintain a recognized credential. To qualify, the expense must be tied to a recognized postsecondary credential program (RPCP) or a recognized postsecondary credential (RPC), whose standards are outlined in section 529(f) of the Internal Revenue Code.

A recognized postsecondary credential program (RPCP) is a program that leads to a recognized credential and meets specific federal or state criteria. These include programs listed on state-approved Workforce Innovation and Opportunity Act (WIOA) lists, those included in the Veterans Benefits Administration’s WEAMS directory, or programs recognized by reputable organizations that provide training or education to prepare individuals for credentialing exams.

A recognized postsecondary credential (RPC) refers to the actual credential earned through such programs. These credentials include those accredited by the Institute for Credentialing Excellence, the National Commission on Certifying Agencies, or the American National Standards Institute. They also include credentials listed in the Department of Defense’s Credentialing Opportunities On-Line (COOL) directory, apprenticeships registered with the U.S. Department of Labor, and occupational or professional licenses recognized by state or federal agencies.

This expansion marks a significant step toward making 529 plans more inclusive for a broader range of learners and career paths. Families and individuals are encouraged to consult a tax adviser to ensure compliance as additional federal guidance becomes available.