From small businesses to large families, a large percentage of the population is receiving at least some tax related benefits from the reforms set in place by the Tax Cuts and Jobs Act, which was passed by House and Senate in its preliminary state several months ago. Yet another group who will benefit tremendously, but may not even know it, is families whose children attend non-public elementary or secondary schools. Whereas before only finances designated for use on college tuition in a 529 account could be withdrawn and used tax-free, now tuition money for private schooling for grades K-12 up to $10,000 can be withdrawn per year and used tax-free.

 While it may seem like a no-brainer now to use a 529 plan to pay for your child’s private elementary or high school, there are still a few things to consider before making a decision. Firstly, because 529 plans have tax-free compounding, taking money out early to pay for pre-college tuition will obviously reduce the growth potential of your money. For example, in a simulation run by the American Enterprise Institute, if a family were to save $250 in their 529 plan per month, but started making withdrawals when their child reached ninth grade instead of entering college, they would reduce their potential federal tax benefit by as much as $2,000. Another thing to know when considering a 529 plan is your specific state’s tax law concerning these plans. Over 30 states have additional tax cuts and benefits on 529 plans, which of course is a strong reason to invest your money in these plans tax-free for your children’s educational future.

 Lastly, even if you already have an account saving up for college, it may not be a bad idea to open a separate account for K-12 tuition payments, as the bill is so young that 529 plans are still primarily designed for longer term college savings, with less risky investments being made as time goes on to ensure there are sufficient funds for college tuition. Of course, everyone’s situation is different, and with proper advising and research, the right plan can be found for each family’s specific education savings needs.