529 Plan Calculator

A 529 plan is a state-sponsored tax-advantaged education savings account with no annual contribution limit beyond the state's aggregate cap, which typically runs from $300,000 to $550,000 per beneficiary. A Coverdell ESA caps contributions at $2,000 per year and must be spent by age 30. The 529 wins on almost every dimension for families saving more than a token amount: higher limits, more investment options, and broader qualified expenses. The Coverdell's only real advantage is that it can be invested in individual securities, which matters to a small minority of savers.

For a family contributing $250 a month for 13 years at a 6% return, the 529 grows to roughly $80,634 with zero federal tax on qualified withdrawals. The same contributions in a taxable account growing at the same rate would face about $4,745 in long-term capital-gains tax when liquidated at college start — a 5.9% haircut on the balance. Add a state deduction of $92 a year in Pennsylvania, and the 529's advantage compounds further. The exact gap depends on your marginal rate, your state's benefit, and how much of the growth comes from dividends versus price appreciation.

If your state offers a deduction or credit for contributions to its own plan — and you file a return in that state — staying in-state is usually the right call, even if the investment options are slightly pricier. If your state offers no benefit, or you live in a state with no income tax like Texas or Florida, you are free to shop for the lowest-cost plan nationally. Plans from Utah, Nevada, and New York are frequently cited for low fees and strong fund lineups, but the best choice depends on your asset allocation and whether you prefer age-based glide paths or manual control.

You have several tax-free or tax-advantaged options before touching the non-qualified path. First, you can change the beneficiary to another qualifying family member — a sibling, cousin, niece, nephew, or even yourself — with no tax or penalty. Second, SECURE 2.0 allows up to $35,000 of leftover funds to roll into the beneficiary's Roth IRA, subject to the annual IRA contribution limit and the 15-year account-age requirement. Third, up to $10,000 can repay a student loan. Only after these options are exhausted does a non-qualified withdrawal trigger ordinary income tax plus the 10% penalty on earnings.

superfunding lets you front-load five years of the annual gift-tax exclusion into a single year. In 2026 that is $95,000 from one donor or $190,000 from a married couple who elects gift splitting. No gift-tax return is required as long as you elect the five-year spread on Form 709 and make no other gifts to the same beneficiary during that window. superfunding is best for grandparents or parents with significant liquid assets who want to remove money from their estate immediately and lock in decades of tax-free growth. If you might need the money back, think twice — the contribution is irrevocable for gift-tax purposes.

A 529 owned by the parent or student is assessed in the federal aid formula at a maximum of 5.64% of its value — far less than the 20% rate applied to student-owned assets like UGMA/UTMA accounts. A grandparent-owned 529 no longer reduces aid directly under the FAFSA simplification that took effect in the 2024–25 cycle; distributions are no longer reported as student income. The net effect for most families is a modest aid reduction that is outweighed by the tax savings. Families near the full-aid cutoff should model the interaction, but for the majority the 529 is still the clear winner.

Since 2024, leftover 529 funds can roll into the beneficiary's Roth IRA without tax or penalty, up to $35,000 over the beneficiary's lifetime. The annual rollover is capped at the Roth IRA contribution limit — $7,500 in 2026 for someone under 50. Three conditions must be met: the 529 account must have been open at least 15 years, the beneficiary must have earned income at least equal to the amount rolled over, and the rollover cannot exceed the annual limit. The 15-year clock is why opening a 529 early, even with small contributions, has lasting option value.

It depends on the starting balance, the expected return, and the cost of the target school. For a public in-state school costing $28,349 today with 4% inflation and a 6% return, a family starting from $10,000 with a newborn has 18 years and needs roughly $130 a month to cover the full bill. Starting from the same $10,000 with only five years to college requires about $1,689 a month for the same school. The calculator's Savings Goal mode solves this exactly — enter your target coverage percentage and it returns the monthly or lump-sum figure.

Anyone can contribute to a 529 — there is no income restriction on the contributor and no requirement that the contributor be related to the beneficiary, though some states limit who can claim the state deduction. Under the current FAFSA rules a grandparent-owned 529 no longer counts as student income when distributions are taken, which removed the old 50% assessment penalty. Grandparent contributions still show up as parent-side resources if the grandparent is named as owner of a 529 for a grandchild in some edge cases, so coordinating ownership before the aid years matter most is worth a conversation with a planner.

Qualified expenses include tuition, fees, books, supplies, required equipment, and — for at least half-time students — room and board. Computers, software, and internet access qualify when used for education during the years enrolled. Two limits stand out: K-12 withdrawals are capped at $10,000 per student per year, and up to $10,000 of leftover funds can repay a qualified student loan. Anything else — a car, travel, health insurance outside the school's published cost of attendance — is non-qualified and triggers tax plus the 10% penalty on earnings.

Most states that offer a deduction require the account owner to be a resident of that state when the contribution is made, not when the withdrawal is taken. A handful of states have reciprocal agreements that extend the deduction across state lines, and a few states — including Utah, Pennsylvania, and Arizona — allow the deduction regardless of which state's plan you use. Moving after contributions are made generally does not claw back prior deductions, but some states impose recapture if the account is transferred to another state's plan. Always check the recapture rules before initiating a rollover between plans.