529 college savings calculator

529 savings plan — tax-free education investing

Section 529 of the Internal Revenue Code authorizes state-sponsored education savings plans that offer one of the few remaining true tax-free investment accounts: contributions grow tax-free and withdrawals for qualified education expenses are entirely federal income tax-free. For families starting early, the compounding effect can be substantial.

What counts as a qualified education expense?

For higher education (college, graduate, vocational): tuition and fees, books and required supplies, computers and related technology, room and board (up to the school's allowance for students enrolled at least half-time), and special needs services. For K-12 (since TCJA 2017): up to $10,000/year in tuition only. Student loan repayments up to $10,000 lifetime per beneficiary (SECURE Act 2019). Room and board and transportation are NOT qualified for K-12.

State tax deductions — choose your plan wisely

Many states offer income tax deductions or credits for contributions to their own 529 plan. Arizona, Kansas, Missouri, Montana, and Pennsylvania offer deductions for contributions to any state's plan. Most other states require you to contribute to the in-state plan. If your state offers a deduction and you're in a 5% state income tax bracket, that's an immediate 5% bonus on contributions.

Even if your state offers a deduction, compare investment options and expense ratios. A state plan with a deduction but 1% higher expense ratios may cost more than an out-of-state plan like Utah (UESP) or New York (direct-sold) with low-cost Vanguard index funds. Visit savingforcollege.com for a state-by-state comparison tool.

Contribution limits and superfunding

There is no annual contribution limit per se, but contributions are considered gifts for federal gift tax purposes. The annual gift tax exclusion is $18,000 per donor per beneficiary in 2024. 529 plans offer a unique "superfunding" option: you can make a lump-sum contribution of up to 5× the annual exclusion ($90,000 per donor, $180,000 for married couples) and elect to treat it as made over 5 years for gift tax purposes. This front-loads the tax-free compounding while removing money from your taxable estate.

Investment options and the age-based glide path

Most 529 plans offer age-based options that automatically shift from aggressive (equity-heavy) to conservative (bond-heavy) as the child approaches college age. For a newborn, an 80–100% equity allocation is common; by age 16, the allocation typically shifts to 30–50% equities. You can also choose static allocations. Regardless of choice, you can change investment options twice per calendar year or when you change the beneficiary.

SECURE Act 2.0 — the 529-to-Roth rollover

Beginning in 2024, SECURE Act 2.0 allows up to $35,000 lifetime of unused 529 funds to be rolled over to the beneficiary's Roth IRA, subject to the annual Roth IRA contribution limit ($7,000 in 2024) and a 15-year account seasoning requirement. This dramatically reduces the risk of overfunding a 529 — excess funds can simply become a Roth IRA head start for your child rather than being penalized. A child graduating at 22 could have $35,000 in a Roth IRA before their career begins.

What if the child doesn't attend college?

You can always change the beneficiary to another qualifying family member. The definition of "family member" is broad: siblings, cousins, in-laws, aunts and uncles, and even spouses are included. With the new Roth rollover option, the worst-case scenario for an unused 529 is now tax-free retirement savings for the beneficiary. Non-qualified withdrawals incur income tax plus a 10% penalty on earnings only — original contributions are never penalized.