If you have grandchildren, a child with disabilities, or a Louisiana family member whose
education is part of your legacy plan, the 529 you set up years ago is doing more work in
2026 than it ever has. Two recent federal laws have changed the game — here’s what
your family needs to know.
What Changed — and Why It Matters
Two landmark pieces of federal legislation have dramatically expanded what 529 plans can do:
- LAW #1: SECURE 2.0 Act (2022) — opened a new path to roll leftover 529 funds directly into a Roth IRA.
- LAW #2: One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 — dramatically expanded what counts as a “qualified” education expense.
Together, these changes make the 529 plan more flexible than ever before — and they create real planning opportunities for Louisiana families right now.
The OBBBA: K–12 Just Got a Major Upgrade
Most families know 529s for college savings. The OBBBA pushes them well past that. Here’s what you can now pay for with tax-free 529 funds:
NEW QUALIFIED K–12 EXPENSES: Tuition at private and parochial schools · Textbooks and curriculum materials · Online learning resources · Standardized test fees (AP, SAT, ACT) · Tutoring by a qualified, unrelated tutor· Therapies (occupational, behavioral, physical, and speech-language) for children with disabilities.
The therapy expansion is especially significant for families with a child with special needs — it creates an important coordination point with any special needs trust your estate plan includes.
The OBBBA expansions are federal. Louisiana has not yet conformed every category for state income-tax purposes. A withdrawal that’s qualified federally could still create a state tax issue. Confirm conformity for the specific expense before drawing on the account.
The 529-to-Roth IRA Bridge
SECURE 2.0 added a feature that estate planners are still getting used to: leftover 529 funds can be rolled into a Roth IRA in the beneficiary’s name. Think of it as quietly turning “unused” college savings into the start of a retirement nest egg.
$35,000
Lifetime rollover cap
15 yrs
Minimum account age required
$7,500
Max annual rollover (2026)
- The 529 must have been open for at least fifteen years. The clock starts when the account is opened — a strong argument for funding early.
- Contributions and earnings made within the last five years cannot be rolled over.
- The beneficiary must own the receiving Roth IRA and must have earned income at least equal to the rollover amount for that year.
- The annual rollover is capped at $7,500 in 2026 (or $8,600 if the beneficiary is 50 or older).
Trusts as 529 Owners: An Underused Tool
The IRS treats a trust as a “person” eligible to own a 529 account. This means your living trust — or an irrevocable trust drafted for your family — can own and fund a 529 directly. It’s the most underused planning tool in this space.
OPTION A: TRUST OWNS THE 529: The trustee becomes account owner of record. Assets stay inside your estate plan, with spendthrift and creditor protections intact. Ideal for long-horizon, multi-generational control.
OPTION B: TRUST FUNDS A 529: The trustee distributes funds to a 529 owned by a parent or other family member. Simpler to administer — but once the money leaves the trust, it loses trust protections.
IMPORTANT: DOES YOUR TRUST AUTHORIZE THIS? Either approach requires the trust to explicitly authorize it. We routinely draft trusts with express power to invest in 529 accounts, change designated beneficiaries, make distributions, and roll the plan over to successor generations. Older trusts often lack this language. A short amendment is worth the trouble before making any funding decisions.
A Louisiana Note: The START Program
Louisiana’s own 529 — the Student Tuition Assistance and Revenue Trust (START) Saving Program — accepts legal entities, including trusts, as account owners, as long as either the owner or the beneficiary is a Louisiana resident.
14%
Earnings Enhancement match for qualifying START owners
START accounts are eligible for Louisiana’s Earnings Enhancement matching grant of up to 14 percent of annual deposits, and a START balance does not affect a beneficiary’s TOPS scholarship eligibility. For most Louisiana families, START remains the right starting point.
What This Means for Your Plan
If Progeny Law Firm established a living trust or special needs trust for your family, we can audit whether it currently authorizes 529 ownership and funding. If you already have a 529, we can check:
- Whether you’re positioned to use the new K–12 categories without losing Louisiana state benefits.
- Whether the fifteen-year clock for a future Roth rollover has already started.
- Whether your trust language needs a short amendment to unlock these new tools.
The OBBBA and SECURE 2.0 don’t change the goal of education planning — they simply give us more tools to reach it.
Ready to Revisit Your Plan?
Call or email our office to schedule a review of your 529 and trust strategy.
(225) 456-1090
www.progenylawfirm.com
Disclaimer: This article is provided for general informational purposes and is not legal, tax, or financial advice. Federal and Louisiana tax treatment of 529 accounts depends on individual facts and on conformity rules that may change. Please consult Progeny Law Firm and your tax advisor before acting on any of the items discussed above.
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