529 Plan Education Savings Calculator

A 529 plan is a tax-advantaged investment account for education savings, named after Section 529 of the Internal Revenue Code. You contribute after-tax dollars. The investments grow tax-free. Withdrawals for qualified education expenses (tuition, fees, room and board, books) are also tax-free at the federal level. Most states offer a state tax deduction or credit for contributions. There are no income limits to contribute. Each state runs its own 529 plan but you can use any state's plan regardless of where you live.

Start by checking if your state offers a tax deduction or credit ONLY for contributions to its own plan. If yes, that's a strong reason to use your state's plan. Pennsylvania, Kansas, Arizona, Maine, Minnesota, Missouri, and Montana let you deduct contributions to any state's plan. If your state has no income tax (Texas, Florida, etc.) or no deduction (California), you can shop for the best plan nationwide. Top-rated plans by Morningstar typically include New York 529 Direct Plan, Utah my529, Ohio CollegeAdvantage, and Nevada SSGA Upromise.

Qualified expenses include college tuition and fees, room and board (for at least half-time students), books and supplies, computers and software used primarily for education, and special needs services. Since 2018, you can also use up to $10,000 per year per beneficiary for K-12 tuition. Apprenticeship programs registered with the Department of Labor also qualify. Student loan repayments up to $10,000 lifetime per beneficiary qualify (this is in addition to the $10,000 K-12 limit).

Several options. You can change the beneficiary to another family member (sibling, cousin, parent, even yourself) without tax penalties. You can leave the money for grandkids. Since 2024, up to $35,000 lifetime can be rolled over to a Roth IRA in the beneficiary's name (subject to annual Roth contribution limits). You can withdraw the contributions tax-free anytime; only the earnings are taxable plus a 10% penalty if not used for education. Some exceptions waive the 10% penalty (military academy, scholarships received).

Depends on your goals. To fully fund a 4-year in-state public college (roughly $120k-$140k future cost for current babies), contribute $250-$400 monthly assuming 7% returns over 18 years. For private college ($350k+ future cost), aim for $500-$700 monthly. Even small amounts add up. $100 monthly for 18 years at 7% becomes about $42,000. Set up auto-contributions on payday. Increase contributions when you get raises. Grandparents can contribute directly to your 529 (a great gift idea for birthdays).

Aggregate limits exist per beneficiary, ranging from $235,000 (Georgia, Mississippi) to $610,000 (New Hampshire). These are total balance caps, not annual caps. For federal gift tax purposes, you can contribute $19,000 per year per beneficiary ($38,000 if married filing jointly) without filing a gift tax return in 2026. You can also make a 5-year lump sum of $95,000 (or $190,000 for couples) front-loaded, then make no contributions for the next 4 years to avoid gift tax issues.

529 plans owned by parents have a modest impact on financial aid. They count as parental assets, reducing aid by up to 5.64% of the account balance under the FAFSA formula. This is far less impact than student-owned assets (20% reduction). Withdrawals from parent-owned 529s do not count as student income. Grandparent-owned 529s used to be problematic but the FAFSA Simplification Act now treats grandparent 529 withdrawals as untaxed income with no effect on aid, making grandparent-owned 529s now neutral or favorable.