Latest / The College Savings Podcast with Fexingo: 529 Plans, Education Funding, and Student Costs / 529 Plans for Your Child's Sports Training and Athletic Development
Transcript
- Lucas: So here's a scene I bet a lot of families know. It's a Saturday morning in early June 2026. You're driving your fourteen-year-old to a tennis academy an hour away. The coaching fees are seven thousand dollars this summer. And you think to yourself, 'Can I pay for this with my 529 plan?' The short answer is yes, sometimes, but it depends on something pretty specific. Luna: I feel like a lot of parents assume sports training is off the table because it's not a textbook or tuition. But I've heard there's a gray area. Lucas: There is, and it's a gray area that actually has pretty clear lines once you know them. The IRS says 529 funds can be used for qualified higher education expenses — tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. The key phrase there is 'required for enrollment or attendance.' Luna: Right, so it's not just any random sports camp. It has to be tied to a school program? Lucas: Exactly. If the training is part of a credit-bearing course at an accredited college or university, then the fees are qualified. For example, say your daughter is a high school junior taking a dual-enrollment course in sports science at a local community college, and the lab requires her to participate in a supervised strength training program. That training fee could be a qualified expense. Luna: Okay, that makes sense. But what about a private tennis academy that's not affiliated with any college? Lucas: Generally, no. Unless that academy itself is an eligible educational institution. Some specialized athletic academies are actually accredited as postsecondary institutions, which means they can receive federal student aid. If your child is enrolled in a degree or certificate program there and the training is part of the curriculum, then tuition and mandatory fees are qualified. Luna: So the key is accreditation and curriculum, not just the activity. That's a big distinction. Lucas: It is. And the IRS has been pretty consistent on this. In a 2019 private letter ruling, they said that fees for a sports camp were not qualified expenses because the camp wasn't part of the university's regular curriculum — it was a separate program. So if you're writing a check to a private coach, you're almost certainly outside 529 territory. Luna: But what about equipment? Like if my child needs a specific type of running shoe for a college track team? Lucas: That's another gray area. The IRS says 'equipment required for enrollment or attendance.' If the college's athletic department requires certain gear and lists it in the course materials, you could make a case. But if it's just general sports equipment, like a tennis racket or a soccer ball, that's not qualified. The safest path is to think of it like textbooks — if the school says it's required, you're on firmer ground. Luna: I want to circle back to something. You mentioned dual-enrollment and community college. What about high school athletics? Can a 529 cover a fee for a high school football program if it's not college credit? Lucas: No, because the eligible institution has to be a postsecondary school. Elementary and secondary school expenses are not qualified — unless you're homeschooling and the state recognizes certain expenses. And that's actually a newer development. Luna: Tell me about homeschool physical education. That seems like a natural fit. Lucas: Under the Tax Cuts and Jobs Act, 529 plans were expanded to cover K-through-12 expenses at public, private, and religious schools, up to ten thousand dollars per year. But that's for tuition. For homeschooling, the rules vary by state. Some states allow 529 funds for curriculum materials, including physical education programs, but it's not universally allowed. You really have to check your specific state's plan. Luna: And if you're wrong, you could owe taxes and a penalty on the withdrawal. Lucas: Right, the earnings portion would be subject to income tax plus a ten percent penalty. So it's not a small mistake. That's why I always tell people: if there's any doubt, get a written statement from the institution that the expense is required. Keep receipts. Document everything. Luna: So for the typical parent whose kid is a good athlete but not headed to college on a scholarship, what's the smart move? Lucas: Honestly? Use the 529 for what it's best for — college tuition, room and board, books. For sports training, pay out of pocket if you can. But if your child is enrolled in a college that offers a for-credit sports program, that's when you can tap the 529. There's also the possibility of using 529 funds for a sports scholarship recipient — the scholarship exception eliminates the penalty, but not the income tax on earnings. Luna: Let me ask a practical question. Suppose my daughter is a Division I athlete on a partial scholarship. Her training table meals and special equipment might be covered by the athletic department, but what about her summer training with a private coach? That's not required by the university, right? Lucas: It's not required for enrollment, so it's not a qualified expense. Same with a personal trainer your son hires to prepare for college tryouts — not covered. The IRS is looking for a direct link to an eligible institution's program. Without that, you're out of luck. Luna: So the message is: don't get creative. Stick to the letter of the law. Lucas: Exactly. And if you're thinking about using a 529 for a sports program, ask the program director: 'Is this part of a degree or certificate program at an accredited postsecondary institution?' If the answer is anything but a clear yes, assume it's not qualified. There are plenty of legitimate ways to use a 529, but sports training is a tricky area. Luna: Speaking of legitimate uses, I've been thinking about how much we cover on this show. We've talked about coding bootcamps, flight school, even robotics competitions. And we do all of this without any ads or sponsors. Lucas: That's a deliberate choice. We want these conversations to be as clear and practical as possible, without any product pushing. If listeners find value in that approach, the best way to support it is a small contribution at buy me a coffee dot com slash fexingo. Luna: It genuinely helps us keep the episodes focused on what matters — helping families navigate their options. So thanks to anyone who chips in. Lucas: Alright, back to the nuance. One more scenario I want to highlight: what about a student who is studying sports management and needs to pay for a certification in personal training as part of their degree? That certification fee, if required by the program, would be qualified. Luna: That's a good example — the certification is directly tied to the curriculum. So if your kid's college says 'you need this certification to graduate,' then it's fair game. Lucas: Right. And the same logic applies to lab fees for a kinesiology class or required uniforms for a college athletic training course. The thread is always: is this a condition of enrollment or participation in an eligible program? If yes, you're good. If it's optional or extracurricular, you're not. Luna: What about travel expenses? Like if the team flies to a tournament? Lucas: Travel is generally not a qualified expense. Room and board is covered if the student is enrolled at least half-time, but that's for living on or near campus, not for away games. So tournament travel, team meals on the road, hotel stays — those are not 529-eligible. Luna: Clear. So the big takeaway is: if you're going to use a 529 for sports, make sure it's tied to a college program, not a club team or private training. Lucas: That's the bottom line. And if you're unsure, consult a tax professional or check with your 529 plan administrator. They see these questions all the time and can give you state-specific guidance. It's worth the call to avoid an audit. Luna: Good advice. I think a lot of parents will appreciate knowing this before they write that check for summer soccer camp. Lucas: Absolutely. And if you have a specific scenario you'd like us to address, send it in. We might cover it in a future episode. Until next time, keep saving smart.