Starting Your 529
The 2018 Tax Law differentiates 529 plans and prepaid tuition plans even further, by allowing up to $10,000/year in 529 plans to be used for K-12 school tuition. There are two big areas of caution. First, many state tax laws have not yet caught up with the new federal tax law, so you should check on your specific state tax laws before using the 529 for K-12 tuition. Second, the typical investments used in 529 plans, the “target date” funds, may no longer be appropriate for investors that are planning to use the 529 plans for K-12 tuition.