Your trusty college savings plan is no longer just for higher-education costs, thanks to the new tax law.
Whether you have young children or grandchildren, you're probably aware of the rising cost of higher education: The average annual cost of tuition, fees and room and board at a four-year private college rose 3.5 percent, to $46,950, for the 2017—2018 school year, according to data from the College Board.
That figure hit $20,770 for in-state tuition at a four-year public institution, the College Board found.
Families can save for those expenses using a 529 plan, which permits you to invest your money without being subject to tax. You can withdraw from the account to pay for qualified educational expenses free of taxes.
You can contribute up to $15,000 per year for each 529 beneficiary.
Here's what's new. The Tax Cuts and Jobs Act added an extra level of functionality for 529s: K–12 private school tuition.
This may upend the way you save in these accounts.
"Now that you can use the money for K–12 private-school education, be aware of what the time frame is in which you're investing money in the 529 plan," said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth.