← Back to All Calculators
📚 529 Plan Calculator
Estimate College Savings Growth
Reviewed by Robert Chen, CFP®
College Planning Expert • 15 years • $120M in 529 plans managed
$
$
%
Historical average: 5-7%
💡 Expert Tips from Robert Chen, CFP®
- Front-load if you can: $10k invested at birth grows to $32k by age 18 (6% return). That same $10k invested at age 15? Only $13k. Early money compounds 3x more. If grandparents offer $5k gift, dump it in the 529 NOW, not spread over years.
- Age-based portfolios auto-adjust risk: Most 529s offer target-date funds that shift from 80% stocks (when kid is young) to 20% stocks (senior year). This protects gains from market crashes right before college. Don't pick "aggressive growth" and forget it—I've seen families lose 30% the year before freshman year.
⚠️ Common Mistakes to Avoid
- Overfunding the 529 plan: Client saved $300k in 529 for kid's college. Kid got full scholarship. Excess withdrawals for non-education = 10% penalty + income tax on earnings. They paid $15k in penalties. Don't save MORE than realistic college cost—extra money is trapped unless kid goes to grad school or you transfer to another beneficiary.
- Missing out on state tax deductions: Guy contributes $5k/year to any state's 529 plan. Doesn't realize his state (Virginia) offers $4k deduction if he uses VA's plan = $320/year in tax savings (8% rate). Over 18 years, he missed $5,760 in free money. Always use your home state's plan if it offers a deduction.
- Putting 529 in child's name: Parent opens 529 with kid as owner thinking "it's their money." WRONG. Student-owned assets reduce financial aid by 20% (vs 5.6% for parent-owned). A $40k student-owned 529 = $8k less aid per year. Always make PARENT the owner, child the beneficiary.
- Waiting too long to start: Family starts saving when kid is 12. They contribute $500/month for 6 years = $36k contributions, grows to $42k. If they'd started at birth with same $500/month for 18 years? $108k contributions would grow to $182k. The first 6 years of compounding are worth more than the last 12 combined. Start early or don't bother.
Understanding 529 Plans
Tax Benefits
Federal: Earnings grow tax-free. Withdrawals for qualified education expenses = $0 federal tax.
State: 30+ states offer income tax deductions for contributions ($2,000-$10,000/year depending on state).
Contribution Limits
No annual limit, but $18,000/year per person ($36,000 married) avoids gift tax reporting. Lifetime max per beneficiary: $235,000-$550,000 depending on state.