There is no doubt that tax-advantaged 529 plans are popular. The National Association of State Treasurers reported that there were 16.96 million 529 educational savings accounts at the end of 2024, with total assets of $525 billion (tinyurl.com/2s4kt2jh).

Now, as a result of recent legislative changes making 529s more flexible, they may benefit more people.

First, as a result of the One Big Beautiful Bill Act, which was signed into law earlier this year (tinyurl.com/bde8t578), 529s can now be used for more "credentialing" programs that are not offered by traditional colleges or universities. These include skilled trades and vocational courses (plumbing, electrical work), professional license and certification costs (CPA testing, bar exam registration) and continuing education to maintain licenses or certifications (nurses, financial advisers), according to Savingforcollege.com (tinyurl.com/3zj924da).

Examples of credentialing programs that qualify are those accredited by the Institute for Credentialing Excellence (tinyurl.com/23a97hx8), the National Commission on Certifying Agencies or the American National Standards Institute (www.ansi.org).

Be sure to check with a credentialing program or a trade or vocational school to confirm that they qualify for 529 expenditures. What can 529 funds pay for? Tuition, books and required fees, as well as fees for certification or license, and continuing education costs.

As for the potential impact, consider that the Bureau of Labor Statistics reported 40.4% of civilian workers in 2024 were required to have a credential (tinyurl.com/yc54cnfd), and the number of employed civilian workers in 2024 was 161 million (tinyurl.com/mrxrb2ku).

Second, starting in 2026, the amount of expenses for kindergarten through 12th grade that can be covered by a 529 increases to $20,000 from $10,000. Additionally, only tuition qualified before July 5, 2025; now, 529s can pay for curriculum and learning materials, online educational tools, dual enrollment costs and national test fees (e.g., the SAT or ACT), according to the new law.

Third, tax-free rollovers from 529s to ABLE accounts, which were to expire at the end of 2025, are now permanent. The rollover counts toward the total amount that can be contributed to an ABLE account for a given year ($19,000 for 2025). ABLE accounts are tax-free savings vehicles for people who have disabilities, provided they meet certain qualifications (something I wrote about earlier this year; email me at readers@juliejason.com if you missed it).

Another major change came about as a result of another act -- SECURE 2.0, which was signed into law in 2022. 529 money can be rolled into a Roth IRA without triggering an income tax on the withdrawal. You have to follow certain rules: The 529 account must have been opened for 15 years; the rollover needs to be done through a direct trustee-to-trustee transfer; the maximum lifetime amount that can be rolled over is $35,000. Read more in IRS Publication 590-A, "Contributions to Individual Retirement Arrangements (IRAs)" (tinyurl.com/sacam2tx). (See the section "Qualified tuition program rollover to a Roth IRA.")

529 plans are operated by state or educations institutions, according to the IRS webpage "529 Plans: Questions and answers" (tinyurl.com/2vv6py26). Their main advantage? "Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of the designated beneficiary, such as tuition, fees, books, as well as room and board at an eligible education institution and tuition at elementary or secondary schools."

To find out more about 529s, check out IRS Publication 970, "Tax Benefits for Education" (tinyurl.com/em6drnej), which gives a host of details about qualified tuition programs, aka 529 plans. Savingforcollege.com provides information on how to choose a 529 plan and what each state offers. Also read Capital Group's article "What can a 529 be used for? More than you may think" (tinyurl.com/w5vzr2np).

These new possibilities might make 529s more attractive to more families. Before taking action, be sure to talk with your accountant or financial adviser about the best way to make use of 529s.

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If you have a brokerage account, you have likely learned about the benefits of "direct indexing," a way to customize, to your liking, stock holdings based on an index such as the S&P 500. Sounds intriguing enough.

In the past, "direct indexing meant paying a lot in commissions and fees," but these days, "thanks to online brokerage platforms (and many RIA custodians) that offer zero-commission trading, investors don't have to be millionaires to do direct indexing," quoting the InvestmentNews.com article "Direct indexing as an investment strategy" (tinyurl.com/4ybr78j6).

As a result, interest in direct indexing has risen and is expected to continue doing so. According to Cerulli Associates (a research, consulting and analytics firm), assets for direct indexing were expected to have a five-year compound growth rate of 12.3% and reach $825 billion in total assets by the end of 2026 (tinyurl.com/wj2jz3ae).

What's the appeal?

With direct indexing, instead of owning a fund, you own the stocks themselves, and by doing so, you can create your own "personal index." That also means that you can take advantage of changes in pricing of those stocks as they trade throughout the day.

That is, "[d]irectly holding securities within an index enables you to potentially take greater advantage of tax-loss harvesting, a maneuver that may ultimately lower your tax bill. Tax-loss harvesting involves selling an investment at a loss, replacing that investment with something similar (but not substantially identical) and using the tax loss to offset other taxable capital gains," states J.P. Morgan Wealth Management's "What is direct indexing and how does it work?" (tinyurl.com/bdhfna7b). The potential tax benefits apply in a taxable account (not an IRA or 401(k)).

Tax-loss harvesting may or may not be successful. With your eyes open, consider this: "[T]he potential tax benefit of this approach depends on the stock market environment and also on whether the 'wash sale' rule applies to the loss transaction, which may defer or deny any tax deduction arising from the loss sale if a substantially identical position is repurchased too quickly," notes the J.P. Morgan article. IRS Publication 550, "Investment Income and Expenses (Including Capital Gains and Losses)," provides more details on wash sales (tinyurl.com/4mpshyr5).

Further, "Over time, the opportunity to harvest capital losses can decline as stock values rise. This is especially true in a portfolio you've held for several years that has appreciated significantly," says the Charles Schwab article "The Pros and Cons of Direct Indexing" (tinyurl.com/y2pffjaa).

What about costs? Morgan Stanley notes in the article "Beyond ETFs: The Benefits of Direct Indexing" (tinyurl.com/55hway5d) that "the strategy may lead to higher management fees than investing in similar ETF strategies, because the level of customization may involve buying and selling securities that can lead to higher transaction costs." Also, there is an overall financial consideration: "[W]hen owning individual securities, direct indexing typically requires a relatively high minimum investment of $250,000."If your direct index is mimicking the S&P 500 Index, you could be holding and trading hundreds of stocks -- quite a number to manage, even though the vehicle used is a separately managed account. "[E]each [stock] will have its own cost basis, dividends, and profit and loss, which could become burdensome at tax time," according to the Charles Schwab article. Burdensome to you –- and potentially your tax preparer.

To read more about direct indexing, check out the following:

-- FINRA Investor Insights' "The Basics of Direct Indexing" (tinyurl.com/35z9pvmy). FINRA oversees member broker-dealers who do business in the U.S.

-- Fidelity Investments' "Direct indexing in detail," (tinyurl.com/4jw68njy). Fidelity is a global financial services company.

-- Parametric Portfolio Associates, considered the pioneer of direct indexing, offers details of its history at tinyurl.com/4k2hamcb.

My advice: Do your homework before jumping in.

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Someone who is 50 or older is able to set aside more money into a 401(k) than someone who is under 50. Called a "catch-up contribution," the idea is to get more money working for you in a tax-advantaged way before you retire.

On Sept. 15, the IRS and the Department of the Treasury issued final regulations that incorporate SECURE 2.0 Act of 2022 changes to catch-ups.

People who are approaching ages 60 to 63 will benefit from a special increased catch-up. This change applies to 401(k)s as well as other eligible retirement plans, such as 403(b)s. See tinyurl.com/5n7zysax.

First, a little background.

Catch-up contributions first came into being as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (tinyurl.com/3tm3kzk7) as a means of helping older workers save more for retirement. The initial catch-up amount was $500, with a planned increase after a few years to $1,000.

In 2025, the maximum amount that a person under age 50 can contribute to a company retirement plan is $23,500; someone who is 50 or older can kick in an additional $7,500 as a catch-up contribution for a total contribution of $31,000.

Under the newly finalized regulations, effective 2025, those who reach ages 60 through 63 this year have a catch-up limit of $11,250 instead of $7,500, meaning the total contribution for that age cohort is $34,750. When someone turns 64, the catch-up limit falls back to the "regular" catch-up contribution.

There will be a yearly cost-of-living adjustment to the catch-up limit for ages 60 to 63 after this year.

You might recall that there was another SECURE 2.0 provision involving catch-up contributions related to those 50 and older who earned more than $145,000 in the previous year. The provision, which was set to start in 2024, called for those catch-up contributions to be designated as post-tax Roth contributions as opposed to pre-tax contributions.

As to Roth catch-up contributions, the final regulations followed proposed regulations published in January 2025 (tinyurl.com/3vfetwsv).

A Roth catch-up contribution would be similar to any Roth contribution in that it would not be "excludible from a person's gross income," and the contributions would need to be held "in a designated Roth account." In addition, a retirement plan "would need to permit a participant subject to a deemed Roth catch-up election to elect to cease making additional elective deferrals."

As for the implementation of the Roth catch-up contribution, IRS Notice 2023-62 (tinyurl.com/3ufhyxdp), which was released in August 2023, indicated that there would be "an administrative transition period" of two years after Dec. 31, 2023, for the requirement, meaning the Roth catch-up contributions would not start in full until 2026.

The final regulations provisions related to the Roth catch-up requirement "generally apply to contributions in taxable years beginning after Dec. 31, 2026," citing the IRS news release about the final regulations (tinyurl.com/jjvdysa3). However, "the final regulations provide a later applicability date for certain governmental plans and plans maintained under a collective bargaining agreement."

In addition, the regulations "also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions."

When the proposed regulations were released, they elicited more than 20 comments over a two-month period.

One comment offered some interesting thoughts. The person recommended that the catch-up age should be raised from 63 to at least 65, if not 67, saying that it would take strain off Social Security "and people's dependence on it." The person added that "I am 64 and still in need of 'catching up' on retirement preparation, especially given the inflation of the last few years. This is true also given that the dollars I have put into retirement no longer have the value they did."

If you are age 60 to 63, take this opportunity to contribute more to your 401(k), keeping in mind that your maximum is $34,750.

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