Child Savings Accounts in TOBBBA: A Look at 529 Plan Comparisons and TCJA Improvements

A Look at 529 Plan Comparisons and TCJA Improvements 

Clarity in College Planning: What TOBBBA Changes for 529s 

With the passage of the Taxpayer Opportunity and Budgetary Benefits Act (TOBBBA), new federal rules now apply to 529 college savings plans—affecting how families contribute, compare, and withdraw from these tax-advantaged education accounts. 

While Montana’s own 529 program—Achieve Montana—remains in place, TOBBBA introduces several federal-level adjustments that expand plan usage, clarify eligible expenses, and attempt to simplify the decision-making process for families across the U.S. 

Here’s a breakdown of what’s changing, what’s staying, and how Montana residents might navigate the updated landscape. 

What Are 529 Plans? A Quick Refresher 

529 plans are tax-advantaged investment accounts intended to help families save for future education costs. Contributions grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses like tuition, books, and some housing and technology costs. 

Montana residents who use the Achieve Montana plan can deduct up to $3,000 per taxpayer ($6,000 for married couples filing jointly) on their Montana state tax return for contributions made during the year. 

Montana’s plan is managed by Ascensus and includes investment options from Vanguard and Dimensional Fund Advisors. 

What TOBBBA Changes for 529s 

1. Standardized Plan Disclosures 

TOBBBA introduces federally required uniform disclosures across all state 529 plans. This means families can now more easily compare plans from different states by looking at: 

• Fees and cost structures 

• Investment performance 

• Plan features and restrictions 

📌 Why this matters: Montana families considering out-of-state 529s (with lower fees or different investments) will now have better tools to make informed comparisons—though choosing another state’s plan may disqualify them from the Montana deduction.

2. Expanded Eligible Expenses 

TOBBBA broadens what 529 funds can be used for, beyond the changes already made under the Tax Cuts and Jobs Act (TCJA). Qualified expenses now include: 

• Apprenticeship program costs (Department of Labor certified) 

• Dual-enrollment courses (college credits earned in high school) 

• Student loan repayment, up to $10,000 per beneficiary (lifetime cap) 

📌 These changes may be especially relevant in Montana’s rural areas, where college alternatives like apprenticeships and dual-credit programs play a growing role in workforce development. 

3. Accessibility and Platform Modernization 

Though not mandated, TOBBBA encourages states to improve online access, particularly for families in rural or underserved regions. This may eventually result in upgrades to plan websites, mobile tools, and user support. 

What’s Still in Effect from the TCJA 

The following 529 expansions from the 2017 Tax Cuts and Jobs Act remain unchanged and are reinforced under TOBBBA: 

• Use of 529s for K–12 tuition, up to $10,000/year per beneficiary 

• Coverage of vocational, trade, and technical education 

• Expanded flexibility in reimbursement for certain expenses 

Montana’s plan aligns with federal guidelines, so families using Achieve Montana should already have access to these options. 

What This Means for Montana 

Staying with Achieve Montana: 

Montana’s plan still provides a state tax deduction, local investment alignment, and compliance with federal tax law. If that’s working well for your family, TOBBBA doesn’t require a change. 

Comparing Out-of-State Plans: 

Thanks to the new standardized disclosures, it’s easier to assess whether another state’s 529 might offer better performance or lower fees—but keep in mind: 

• Montana’s state deduction only applies to contributions made to Achieve Montana. 

• Switching to another state’s plan may forfeit this annual tax break. 

Using 529s Beyond College: 

For families who plan to support apprenticeships, help repay student loans, or front-load dual-credit courses in high school, the expanded qualified expenses offer new opportunities to apply these funds more broadly. 

Final Takeaway 

The passage of TOBBBA creates a more structured national framework for 529 plans. For Montana families, the main takeaways include clearer plan comparisons, broader flexibility in spending, and continued benefits through the Achieve Montana deduction. 

Whether these changes lead to more usage or more confusion will depend on individual circumstances—but staying informed can help households make smarter planning choices. 

As always, consult with a tax advisor if you're unsure whether to open, transfer, or adjust a 529 plan under the new rules. 

Swanson Agency Montana Roots. Future Focused. 

Education, tax planning, and financial clarity—for every step of the journey.