What You Need to Know About 529 Savings Plans

Introduction

On July 4, 2025, the One Big Beautiful Bill Act (H.R. 1) was enacted by Congress containing the provisions of The Freedom to Invest in Tomorrow’s Workforce Act. Among those provisions was a new subsection that expands the qualified use of Section 529 savings plans (also known as Qualified Tuition Programs) to include costs associated with post-secondary training and credentialing programs. This major change broadens the use of 529 savings plans beyond traditional college savings to support workforce training, credentialing, and career development.

What does this mean for the smart home industry? The expanded use of 529 savings plans could make it easier for students and prospective professionals to pursue the training and credentials needed to enter the industry. For CEDIA members, it also offers a new way to think about workforce development, employee benefits, and supporting the people building careers in smart home technology. This guide breaks down what the changes mean and how they may apply to your business, employees, and future workforce.

What is a 529 Savings Plan?

A 529 savings plan is designed to help the account owner save for college and a range of other qualified education expenses, including trade schools, K–12 programs, apprenticeship programs, and now, non-governmental professional credentialing programs.

Funds invested in a 529 savings plan grow free from federal income tax, and withdrawals remain tax-free when used for qualified education expenses. Additionally, many states mirror the federal 529 savings plan tax advantages by offering them at the state level.

Key Facts About 529 Savings Plans

Whether you’re upskilling for a new position or pursuing a long-held passion, 529 savings plans can be the right tool to make continuing education and workforce development more affordable.

Individuals of any age can use a 529 savings plan. The account owner can name anyone with a Social Security or taxpayer ID number as the beneficiary, including themselves.

Adults returning to school or pursuing a professional license can either change the beneficiary of an existing account or open a new 529 savings plan in their name.

A wider range of education and training costs qualify. The provisions within H.R. 1 expand 529 savings plan eligibility to cover expenses for obtaining and maintaining many post-secondary certifications, occupational and professional licenses, and professional certifications.

These include:

• Skilled trades and vocational programs
• Occupational and professional licenses in state and federal-regulated fields
• IT, cyber security, and other technical certification fees
• Continuing education or renewal courses required to maintain a license
• Books, supplies, and required equipment for qualified licensing or recognized postsecondary credential programs
• Certificates of completion of apprenticeships that are registered and certified under the National Apprenticeship Act

What is Considered a Recognized Postsecondary Credential?

Some credentials are automatically designated as recognized postsecondary credentials for which beneficiaries of a 529 savings plan can incur qualified expenses.

These include:

• Certifications issued by the American National Standards Institute (ANSI), the Institute for Credentialing Excellence (I.C.E.), or the National Commission on Certifying Agencies.
• Any occupational or professional license that is issued or recognized by a state or the federal government.
• Any certification that is required for an occupational or professional license.
• Certificates of completion of apprenticeships that are registered and certified under the National Apprenticeship Act.

Do CEDIA Smart Home Certifications Qualify?

Yes, the CEDIA Cabling & Infrastructure Technician (CIT) and Integrated Systems Technician (IST) certifications are recognized as qualified postsecondary credentials. Covered expenses include exam fees and preparation materials, such as textbooks, online pathways, review courses, and boot camps. IST holders can also use 529 savings plans for any courses that require CEUs for renewal.

Employer Considerations for 529 Savings Accounts

By offering access to a 529 savings plan, employers can provide a low cost, effective workplace benefit that supports their employees’ long-term financial goals.

Advantages for businesses include increased employee productivity, higher job satisfaction, and higher rates of retention.

Plans can be set up at zero direct cost to the employer, and companies of any size can offer direct deposit payroll funding without strict participation minimums.

How Businesses Can Sponsor a 529 Savings Plan for their Employees

• Set up an employer-sponsored 529 Savings Plan. Companies can work with their state provider to establish an employer-sponsored 529 savings plan.
• Assist with employee enrollment in 529 savings plans. Businesses can help employees by providing information on the benefits and how to start a 529 savings plan.
• Offer payroll deductions. Employees can have their contributions automatically deducted from their paychecks and deposited into their 529 savings plans.
• Provide matching contributions. Employers can provide a 529 savings plan match, or contribute as a bonus or when a specific work milestone is met. Several states offer tax credits or deductions to businesses that make direct contributions to employee 529 savings plans .

Are Employer Contributions to 529 Savings Plans Tax Deductible?

Employer contributions to an employee’s 529 savings plan are treated as taxable compensation to the employee and therefore are a compensation expense for the employer.

However, when an employer contributes to an employee’s 529 savings plan, those payments are typically treated like any other form of employee compensation or benefit. That means the employer can usually deduct the contribution as a business expense, just like wages or other benefits, assuming it is an ordinary and necessary business expense.

It is important to do the following:

1. Check Your State. See if your state offers a tax benefit for contributing to a 529 savings plan and if you must use your home state’s plan to get it.
2. Understand Limits. Be aware of your state’s annual deduction/credit limits and the overall lifetime contribution caps set by your state.

Important Points to Consider for your 529 Savings Plan

1. Contact Your State 529 Savings Plan Administrator. Ask if your plan has an option to make withdrawals to pay for qualified expenses for postsecondary credentialing.
2. Be Aware of State Variations. While the federal law has expanded qualified expenses to include post-secondary credentialing programs, state 529 saving programs may need time to update their rules.
3. Keep Documentation. Plan beneficiaries are encouraged to keep receipts and records related to any qualified credentialing expenses in case of an audit. Consult a tax professional to ensure withdrawals are made according to the requirements of your 529 savings plan.

List of State 529 Savings Plans

If you are considering opening a 529 savings plan visit The 529 Network (The National Voice for Education Savings Plans) www.529network.org

529 Plans by State: www.529network.org/529-plans-by-state/

General Disclaimer:

The information provided here regarding Section 529 savings plans is for informational and educational purposes only and is not intended to provide specific legal, financial, or tax advice. This information is not binding on CEDIA, any state agency, financial institution, or the taxpayer.

Due to the unique circumstances of each individual's situation, you are strongly advised to consult with your own qualified financial advisor, tax professional, or legal counsel before making any investment decisions. The information provided in this document should serve only as a introduction for further investigation and study of the current laws and procedures related to 529 savings plans in your state.