When your child turns 18, nothing fundamentally changes with a 529 plan. You can still contribute, claim state tax deductions or credits, and keep the money in the account indefinitely—even if your child is in college, graduates, or decides not to attend.
To clear up some common misconceptions, when your child turns 18, a 529 plan:
- Does not expire or require withdrawals
- Continues to offer state and federal tax benefits
- Can still receive contributions
- Can fund graduate school or other qualified education expenses
- Allows account owner changes or beneficiary switches
Here’s more on the impact on 529 plans of your child turning 18.
What happens to 529 college savings when your child turns 18?
529 plans do not have age limits. When a 529 plan beneficiary graduates or leaves college, the funds can remain in the account indefinitely.
Investments in the 529 plan will continue to grow tax-deferred, and distributions will be tax-free as long as they are used to pay for qualified expenses, which include college costs and up to $10,000 per year in K-12 tuition. Taxpayers in over 30 states may also claim a state income tax deduction or credit for 529 plan contributions.
Federal and state income tax benefits are available regardless of the 529 plan beneficiary’s age.
Can you still claim 529 state tax benefits after your child turns 18?
Yes, you can still claim 529 state tax benefits after your child turns 18. Most states have annual limits on the amount of 529 plan contributions that qualify for an income tax deduction or credit, but these limits aren’t related to the child’s age.
These limits are typically around $10,000 per year, but some states have higher limits, and some states have lower limits.
- Illinois taxpayers may deduct up to $10,000 ($20,000 if married filing jointly) in 529 plan contributions from state taxable income each year.
- Indiana taxpayers may claim a 20% income tax credit on up to $7,500 in 529 plan contributions for a maximum annual credit of $1,500.
- Pennsylvania offers a state income tax deduction for 529 plan contributions up to the amount of the annual gift tax exclusion amount ($19,000 in 2025).
- Contributions to a 529 plan are fully deductible in New Mexico, South Carolina, and West Virginia when computing state income taxes.
State income tax benefits may be subject to recapture in the event of a non-qualified distribution, a rollover to another state’s 529 plan, or when distributions are used to pay for K-12 tuition. Rules vary by state.
None of these limits, however, depend on the beneficiary’s age.
Should you keep funding a 529 account after the child reaches age 18?
Parents should continue to make 529 plan contributions until they are finished paying for their child’s college education. There won’t be much time left to take advantage of federal tax benefits, but parents may still be able to claim a state tax income tax benefit. By funneling the remaining college tuition through a 529 plan and claiming a state income tax deduction or tax credit each year, parents essentially get the equivalent of an annual discount on college costs at their marginal tax rate.
There’s no need to stop contributing once the beneficiary graduates college. 529 plan funds can be used for graduate school or continuing education at an eligible institution. Parents who claim a state income tax benefit can invest the tax savings into the 529 plan for an extra savings boost.
If leftover funds are available, 529 funds can be used for several purposes, including rollovers to Roth IRAs, student loan repayment, and changing the beneficiary on the account to another child.
529 plan tax benefits for grandparents
Grandparents can also take advantage of 529 plan tax benefits, regardless of the grandchild’s age.
Grandparents who want to give a gift of college savings often wonder whether they should open their own 529 plan or contribute to a parent-owned account. While there are some advantages for grandparents to own their own 529 plan account, having a parent-owned 529 plan will minimize the impact on the student’s eligibility for need-based financial aid.
Grandparents may still qualify for state income tax benefits regardless of who owns the 529 plan account. Most states allow anyone contributing to a 529 plan, including a grandparent, to claim a state income tax deduction or tax credit. Only 10 states require the taxpayer to be the account owner.
In addition to state income tax benefits, some grandparents may use 529 plans as an estate planning tool. In 2025, contributions up to $19,000 qualify for the annual gift tax exclusion and do not count against the $13.99 million lifetime exemption.
Grandparents can use 5-year gift-tax averaging to make lump sum contributions between $19,000 and $95,000 that can be spread evenly over 5 years. The gift tax exclusion amount is per gift giver, per beneficiary. For example, a grandmother and grandfather with three grandchildren can contribute $570,000 to the grandchildren’s 529 plans ($190,000 each) in 2025 without paying gift taxes.
