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How New Tax Changes Promote 529 Investments

October 25, 2021

529 Plans Can Now Be Used for K–12 Education

The 2017 Tax Cuts and Jobs Act (TCJA) brought several changes to 529 savings plans, the most common type of 529. (The other main type, prepaid tuition plans, is offered by only a small number of states.) In particular, the new law expanded 529 savings plans to cover K–12 education.

Previously, 529 plans, also referred to as qualified tuition programs or QTPs, were reserved for post-secondary education expenses. Those expenses included tuition and mandatory fees, room and board, textbooks, and other essentials. Withdrawals used for these qualified expenses were tax-free.

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