What You Need to Know About 529 Plans & Trade School

Of all life’s investments, the type of education a person gets and what they want to do with that education is one of the biggest, both personally and financially. Especially with educational fields and job markets looking much different than they did a few years ago, it’s increasingly crucial to ensure that you have a financial plan for your education, no matter what option you choose. Whether attending a four-year university, a community college, or a trade school, you need to know your options for offsetting costs like tuition, fees, housing, and educational supplies. 

One popular option is the 529 plan offered by each state, which allows you to put away money to later be applied to educational costs. Because these plans provide many benefits and make financing education much more manageable, it’s crucial to have a good understanding of how they work, what they can be used for, and who can contribute to them. If you’re the holder or beneficiary of a 529 account, here’s what you need to know about the ins and outs of this critical financial tool.

The Basics of 529 Plans

What Is a 529 Plan?

At its most basic, a 529 plan is a savings account with tax advantages that is used to help individuals, families, and groups finance educational costs. Much like 401(k) plans or Roth IRAs, these accounts are also investment outlets. This means that the funds a family puts into a 529 are invested by the holding institution, and the returns on investment are put back into the savings to grow the account’s value and be reinvested. Investment of the funds allows the account owner to eventually take out more money than they’ve put in.

Benefits of a 529 Plan

Options for Tax Deductions & Credits

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Depending on your state of residence or the stipulations of an independent 529, a certain dollar amount of your yearly contribution may be eligible for tax deductions or tax credits. In Ohio, up to $4,000 a year can be written off as a tax deduction. This benefit also extends to family or friends who want to contribute a gift to a 529 plan. Up to $15,000 per year are eligible for a gift tax exemption. For estate planning purposes, up to $75,000 can be deposited at once and treated as a tax-exempt gift given over a 5-year period.

Income Tax Exemptions

Normally, when investments yield high returns, you have to pay income tax on the money you make. Profits made on investments through a 529 plan are exempt from such taxes, meaning that any money gained can go directly toward paying for education expenses. Like other investment options, the longer a 529 has money in it, the higher its returns will generally be. There are also no taxes or penalties for withdrawing money for qualifying expenditures.


These plans are highly flexible and can serve many purposes. Unlike other education funds, money in a 529 is available to the beneficiary throughout their life, whether they’ve just graduated high school or they’re returning to education after decades in the workforce. And while each plan has only one beneficiary at a time, changing beneficiaries is a simple process. This allows funds raised for one child to roll over to another if not all used. 

The funds are also available no matter where in the country the student attends school. Plans administered in your state of residence can be used to pay for tuition at a school 1,500 miles away just as easily as they can be used in-state.


529 plans are extremely easy to maintain, and in many cases, you won’t need to take any action for years at a time. When depositing into them, they can be set up to automatically draw funds from your bank account at set intervals throughout the year, or they can be included as payroll deductions. The investment options are also handled by the bank that administers the account, so there’s very little you need to do while earning money. Just decide what type of investment option you want, set it, and check back periodically to ensure you’re happy with the results. If you want to make any changes, you just need to contact the institution that runs the account, and they’ll handle the details. 

What Type of Education Can a 529 Plan Be Used for?

In order for educational expenses to qualify for payment from a 529 account, they must be used at a federally accredited educational institution. These are institutions that accept federal financial aid, and you can check online if your preferred institution qualifies. The eligible schools aren’t limited to four-year colleges and universities. Community colleges, trade schools, and even graduate schools can all be financed from a 529. 

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It’s also possible to pay for fees and materials associated with apprenticeships, as long as the program is registered with the National Apprenticeship Act. 

What Expenses Qualify for 529 Coverage?

Eligible expenses are the same for universities, community colleges, and trade schools alike. Most importantly, as long as you’re attending an accredited and eligible institution, all tuition and fees can be paid from a 529. All supplies, equipment, and textbooks required for enrollment, attendance, and classes are also covered. For trade schools, this includes tools and heavy equipment that may be needed. 

Not only are computers and related electronic equipment covered, but so are the costs of internet access. Room and board are also eligible, regardless of if it’s on- or off-campus. However, there are a number of restrictions for the eligibility of room and board, including minimum enrollment, so you should verify that the expense meets all the necessary requirements before paying for it from a 529. 

If you need to take out loans to afford the costs of a program, those can be paid back with 529 funds. This makes a 529 plan a good idea for graduates who will need to pay for student loans for an extended period.

Why Do Students Choose Trade School?

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With so many people currently bogged down in student loan debt and struggling to find lucrative careers in their fields, many recent graduates and others breaking into the workforce are looking to save money on education while gaining experience in an industry with openings and job security. Many trades are now booming and are trying to fill vacancies as soon as possible. This immediate opportunity for consistent work appeals to many. 

Many trade schools also have close ties with the industries they’re training in, and these connections offer students a smooth transition between school the workplace. It’s increasingly common for trade school students to have full-time, high-paying jobs lined up months before graduation. 

These careers also tend to require less than two years of training to get certified. This means that young people are able to move from high school into the workplace much more quickly than if they were to attend a four-year institution. Saving money and time in schooling before moving into steady careers sets these young folks up for long-term financial stability and helps them save money for major financial decisions like buying cars and homes and starting businesses.

If you’re looking to transition into a well-paying, crucial industry with high job security and autonomy, take the CDL training program at Hamrick School in Medina, OH, and become a truck driver. This fully licensed and accredited school has trained new truck drivers for over 40 years, and they use their connections and depth of experience to give every student the tools they need to succeed. They offer advanced- and master-level CDL training, with classes run by experienced professionals with decades of collective experience. The school also offers a robust financial aid package to help ensure students can learn without worrying about finances. Learn more about their admissions process online, and call (330) 239-2229 to ask for more info about financing options.