People Without Kids Are Hacking The College Savings Account

Mia Samson has a few thousand dollars in a college savings account she’s been funding for years — even though she doesn’t yet have kids and may not end up giving them the money once they’re born.

The 28-year-old wealth advisor in Santa Monica was looking for another way to save after maxing out contributions to her Roth IRA, funding her 401(k) and feeling her brokerage accounts were in a good place. She started stashing leftover money in a 529 account, which allows money saved for education to grow tax-free, figuring she’d get a head start on affording college for her future children. Single at the time, Samson set herself as the beneficiary.

Since then — six years ago — she met her boyfriend and bought a home. The prospect of parenthood is closer than when she opened the account. But now the rules around 529 plans have changed, giving her another option for the cash: she could roll it into her own Roth IRA. She hasn’t decided to do so but appreciates the flexibility.

“I’ve been putting away this money for expectedly not me — and now, it could be for me,” Samson said. Other options that have crossed her mind: using it to fund additional professional certifications, putting it toward her future child’s private school tuition or gifting it to a future niece or nephew.

Avid savers like Samson have discovered new uses for the humble college account.

Congress in 2022 tweaked the rules governing 529 plans, letting holders roll up to $35,000 in unused funds into a Roth IRA. As a result, savers are pouring money into the accounts after hitting the annual limits for contributing to their retirement plans — treating the 529 as a backdoor for funding a Roth IRA. One in 4 parents surveyed in Fidelity’s 2026 College Savings Indicator Study said they are now more likely to open a 529 account given the rollover and alternative uses.

It’s still a way to prepare for the expense of college. But it has turned into a wealth-building tool on the side, for parents and children alike.

“This is like Roth IRA-maxxing,” said Robert Jeter, a financial advisor at Back Bay Financial Planning & Investments. “If somebody brought this to me, I’d be like, ‘Man, you’re really after every last dollar.’”

The expanded interest in 529 accounts comes as Americans increasingly question whether they or the next generation will have enough money to retire. Social Security’s trust fund is projected to be depleted in 2032. Almost half of working adults in a recent survey by insurance broker NFP said they were “deprioritizing or unable” to save for retirement because of housing, car payments, health care and other everyday expenses.

There are limits to using a college account for retirement savings.

In order to roll over the money, the 529 account — named for a section of the US federal tax code — must have been open at least 15 years, and it must have the same beneficiary as the Roth IRA. The funds being moved must have been in the college account for at least five years.

In addition, savers are still bound by the Roth IRA’s annual contribution limit — $7,500 for 2026 — so they can’t move the $35,000 all at once. Instead, they’ll need to plan the transfers several years in advance and roll over the money bit by bit. But there are advantages as well. Unlike direct contributions to a Roth IRA, a 529-to-Roth rollover isn’t currently subject to income limits. Up to $10,000 in earnings from a Roth IRA can be used for a down payment on a first-time home purchase without incurring taxes or a penalty.

“If there’s a non-zero percent chance that you may have a kid in the future, I’m telling people to open up 529s,” said Kyle McBrien, senior financial planner at Betterment. “Even if it’s in their own name, it’s getting this 15-year clock started. And at the end of the day, if you end up needing it 15 years down the road, great.”

The accounts — which typically place money in a mutual fund, ETF or bonds — allow investments to grow tax-deferred. Withdrawals are tax-free when used for education expenses such as tuition, fees and books. With recent changes those qualified expenses also include things like private school tuition, instruments for music students and flying instructions for aspiring pilots.

Contributions can also provide an opportunity to save on state taxes, depending on where the account holder lives. Most states offer either deductions to lower the holder’s taxable income or credits to reduce their tax liability.

Jess Bohorquez lives in Illinois, where married taxpayers filing jointly can reduce their state taxable income up to $20,000 per tax year by contributing to a state-sponsored 529 account.

She opened a 529 account at age 27, when she and her new husband still weren’t sure whether they wanted children. But inspired by a newfound “obsession” with personal finance, as well as conversations with a friend without kids who was opening her own college account, Bohorquez decided to start a plan after maxing out her 401(k) and Roth IRA. Even if she didn’t end up having children, she envisioned using the funds if she ever needed or wanted to go back to school.

“I really thought about it as an experiment,” she said. “When I look back on that, I think, ‘What a strange choice for a 27-year-old to make,’ and it was a bit of a gamble. But I was excited about the idea of diversifying and assigning different roles to my money.”

Now 35 and pregnant with her first child, due in December, she’s amassed about $15,000 in the account. She plans to make her son the beneficiary once he’s born, so he can fund his own education or put it toward his Roth IRA.

“I don’t know what college will look like in 20 years, or 18 years, if my child will even want to go to school, if the system will look completely different,” said Bohorquez, who is now a personal finance content creator. “I feel so insanely lucky that I got the scholarship that I did that allowed me to graduate debt-free. I would love it if my child could have that same good fortune of starting their career with that clean slate of not having that debt.”

Some financial advisors warn the 529 account may not be the right savings tool for everyone. Its future terms aren’t iron-clad, since federal tax policies are always subject to change by Congress. There’s a chance the benefits savers are chasing could some day be tweaked — or voided.

In addition, changing beneficiaries on the accounts is more complicated than many savers realize, with multiple pages of paperwork required and lingering questions about whether switching beneficiaries restarts the 15-year clock. Also, if the account holder’s ultimate goal is rolling the money into a Roth, the potential for overfunding is high.

But many savers are willing to accept those risks.

Karan Maroke opened a plan for each of his two children this year, aiming to roll over the money into Roth accounts as soon as they’re both eligible. He started with $150 in each, and if the plans average a 7% annual return, he’s hoping the savings will grow to around $1 million apiece by the time each child reaches age 60.

Maroke, who lives in the San Francisco Bay Area, has no clue what kind of job market they’ll face as adults. His wife recently spent about a year searching for work after a layoff that the couple blamed on artificial intelligence. All the more reason to start saving for the kids now.

“Me being a ’90s baby, it was mundane, but it was kind of predictable: You go to college, get good grades, get a good career,” said Maroke, 33.  “Now, that doesn’t exist.”

This article was provided by Bloomberg News.