# Bipartisan Bill Allows 529 Plans to Be Used for First Home Purchase Senators introduce a bill to allow 529 plans to be used for purchasing a first home. - **Source:** [The College Investor](https://brifing.si/source/d431d77d-492e-4105-be7c-2525bbb643ab) - **Published:** 2026-08-07 - **Topic:** [Finance](https://brifing.si/c/finance) - **Original article:** - **On Brifing:** https://brifing.si/s/ad063878-108a-4924-be29-8b7ef3cfd87f ## Details of the Bill Senators Jon Husted and Michael Bennet introduced a bill allowing 529 plans to be used for purchasing a first home. The bill permits tax-free withdrawals of up to $35,000 from 529 accounts. Under current law, using 529 funds for home purchases incurs income tax and a 10% penalty. ## Current Situation and New Opportunities Currently, the only way to withdraw excess funds from 529 plans is through the SECURE 2.0 provision, which allows rollovers to Roth IRAs. The new bill adds the option to withdraw funds for first-time home purchases, potentially encouraging families to contribute more to 529 plans. ## Mechanics of the Bill The bill requires the 529 account to have been active for at least 15 years. Contributions and earnings from the last five years are not considered. The withdrawn funds must be used within 60 days for purchasing a primary residence, and the buyer must be a first-time homeowner. ## Limitations and Conditions The $35,000 limit is a lifetime cap shared with Roth IRA rollovers. If the home purchase falls through, the funds must be returned to a 529 or ABLE account within 120 days. Selling the home or ceasing to live in it within five years results in recapture of the tax benefit. ## Differences Between House and Senate Bills There are differences between the House and Senate bills. For example, the 15-year period applies to one or more 529 plans. The tax benefit is only available to the original account holder or a successor from the same generation. ## Support and Future in the House The House bill has garnered support from 10 sponsors, including two Democrats. Bennet is the sole supporter on the tax-writing committee. With Congress having passed housing legislation this year, the bill's passage remains uncertain. ## Importance for Families The fear of overfunding 529 plans has led families to limit their contributions. The new bill could alleviate this fear, encouraging families to contribute more. This could be particularly beneficial for graduates with student loans. ## Conclusion and Expectations The bill has bipartisan support in both the House and Senate. Expanding the use of 529 plans could provide families with greater flexibility. However, the bill's passage this year remains uncertain. ## Sources covering this story - https://thecollegeinvestor.com/85774/new-bipartisan-bill-would-let-529-plans-pay-up-to-35000-toward-a-first-home/ — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._