529 Plan Calculator

Q: How much should I put in a 529 plan?

A common starting point: contribute enough monthly to project reaching one-third of the expected 4-year college cost, since loans and income can cover the rest. For a public in-state school ($100,000 over 4 years), target $33,000 in the 529 by college start. Starting at birth with $200/month at 7% return grows to approximately $84,000 by age 18. The actual amount depends on your college goal, current savings, return assumptions, and how many years remain.

Q: What is the 529 plan annual contribution limit?

529 plans have no annual contribution limit set by the IRS, but contributions are considered gifts for tax purposes. Each person can contribute up to the annual gift tax exclusion ($18,000 per recipient in 2024) without filing a gift tax return. Superfunding allows up to $90,000 per beneficiary at once (5 years of exclusions front-loaded) with no additional gifts for 5 years. State deductions are typically capped at $10,000–$20,000 per year.

Q: Can I use a 529 if my child doesn't go to college?

Yes — several options. SECURE 2.0 (2024): roll up to $35,000 of unused 529 funds to a Roth IRA for the beneficiary (account must be 15+ years old, subject to annual Roth contribution limits). Change beneficiary to another family member. Use for K-12 tuition (up to $10,000/year) or trade/vocational school. Withdraw non-qualified (pay income tax + 10% penalty on earnings only). The Roth rollover option makes 529s dramatically more flexible.

Question 1

What is a 529 plan and how does it work?

Answer

A 529 plan is a state-sponsored investment account designed for education savings. Contributions are made with after-tax dollars, but growth and withdrawals are completely federal-tax-free when used for qualified education expenses — tuition, room & board, books, computers, K-12 tuition (up to $10,000/year). Many states also offer a state income tax deduction on contributions. The account is controlled by the owner (parent/grandparent), not the student, which has FAFSA impact advantages.

Question 2

How much should I contribute monthly to a 529?

Answer

A simple calculation: take your college goal (say $80,000 for a public in-state school), subtract your current 529 balance's future value, then solve for monthly payment. At 7% return with 13 years of saving from birth to age 18: $300/month grows to approximately $94,000. Starting later dramatically changes the equation — at age 8, you need $500/month to reach $94,000 by 18. Use our calculator to find your specific number.

Question 3

529 vs Roth IRA for college savings — which is better?

Answer

529 wins if you're confident in the college path: more flexibility on qualified expenses, state tax deductions, no income limits, higher contribution capacity, and better FAFSA treatment (parent asset vs retirement asset). Roth IRA has an advantage in flexibility — withdrawals of contributions (not earnings) are penalty-free at any time for any purpose. Since SECURE 2.0, unused 529 funds can be rolled to a Roth IRA (up to $35K lifetime), making the 529 vs Roth debate mostly moot — use both if possible.

Question 4

What are qualified 529 withdrawals?

Answer

Federal qualified expenses: tuition and fees, room and board (up to the school's COA if enrolled at least half-time), books and supplies, computers and technology required for enrollment, special needs services. K-12 tuition (up to $10,000/year). Apprenticeship programs registered with the Department of Labor. Student loan repayment (up to $10,000 lifetime per beneficiary). Non-qualified withdrawals face income tax + 10% penalty on earnings only — principal is always penalty-free.

Question 5

What is 529 superfunding?

Answer

Superfunding allows contributing up to 5 years of annual gift tax exclusions at once ($18,000 × 5 = $90,000 per beneficiary in 2024, or $180,000 from a married couple). You make a one-time election on Form 709 — you cannot make additional gifts to that beneficiary for the 5-year period without gift tax implications. This is especially powerful for grandparents who receive inheritances or have a windfall. The upfront lump sum benefits from compound growth for the entire savings period.

Question 6

How does a 529 affect FAFSA?

Answer

Parent-owned 529 plans count as a parental asset, assessed at a maximum of 5.64% in the Expected Family Contribution formula. Student-owned 529 plans count at 20%. Grandparent-owned 529s used to count as student income (assessed at 50%), but under the new FAFSA Simplification Act (2024-25 and after), distributions from grandparent 529s no longer count against aid eligibility. Grandparent 529s are now the most FAFSA-friendly structure for many families.

529 Plan Calculator

529 Plan Calculator

529 Plan Calculator

State Tax Deductions for 529 Contributions

The Power of Starting Early

SECURE 2.0: The Roth IRA Rollover Rule (2024)

529 Plans — Common Questions

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