College Savings Calculator

A 529 plan is a tax-advantaged savings account designed for education expenses. Contributions grow tax-free, and withdrawals for qualified education expenses (tuition, room, board, books) are federal income tax-free. Many states offer additional state tax deductions. The 2025 annual gift-tax exclusion limit is $19,000/person.

Average annual costs (2024-25): Public 4-year in-state: ~$28,000 (tuition + room/board). Private nonprofit 4-year: ~$60,000. Costs typically increase 4-6% annually. Over 4 years, expect $120k-$250k+ depending on school type. Financial aid can significantly reduce actual cost for many families.

The earlier the better due to compounding. Starting at birth vs. age 10 can mean 2-3x more money at college age. Even small amounts invested early grow substantially. If starting late, maximize contributions and consider more aggressive investment allocation in the early years.

Qualified expenses: tuition, fees, room and board, books, supplies, computers required for school. Since 2024, up to $35,000 of unused 529 funds can be rolled into a Roth IRA (with some restrictions). K-12 tuition (up to $10,000/year) also qualifies.

You can transfer the 529 to a sibling or other family member tax-free. Starting 2024, up to $35,000 can roll into a Roth IRA (must be 15+ year old account). Non-qualified withdrawals pay income tax + 10% penalty on earnings only — the principal comes out tax-free since it was already taxed.