Summary

Allows distributions from Section 529 college savings plans to pay reasonable transportation expenses, including parking, for travel to or in connection with attendance at an eligible educational institution, up to the institution's cost-of-attendance (COA) transportation allowance. Also permits 529 distributions for transportation and parking expenses incurred while participating in an apprenticeship program. These changes apply to distributions made after the date of enactment.

Key Points

• Permits 529 plan withdrawals to pay reasonable transportation costs (including parking) for attending eligible colleges and programs.
• Caps transportation reimbursements at each institution’s cost-of-attendance transportation allowance under the Higher Education Act.
• Extends the transportation allowance to expenses tied to participation in apprenticeship programs.
• Changes are made by amending the qualified expense rules in the Internal Revenue Code for Section 529 plans.
• Applies to distributions made after the date of enactment — not retroactive.
• Does not modify contribution limits or other non-transportation qualified expense rules for 529 accounts.
• Requires plan administrators and taxpayers to update documentation and tax reporting to reflect the new qualified expense category.
• Targets out-of-pocket student costs (commuting, travel, parking) rather than creating new direct federal spending.

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