529 Plan Calculator 2026 — College Savings
Project your 529 education savings plan balance at college start, estimate the funding gap against future tuition costs, and check SECURE 2.0 Roth IRA rollover eligibility. Updated with 2026 gift exclusion limits.
How It Works
- Enter your current 529 balance and monthly contribution
- Set your child's age and expected college start age
- Enter college cost details and inflation rate
- Review your results and funding gap
Understanding the 529 Education Savings Plan
A 529 plan is one of the most powerful tools American families have for funding higher education. Named after Section 529 of the Internal Revenue Code, these state-sponsored investment accounts allow your money to grow completely free of federal tax — provided the funds are used for qualified education expenses. With college costs rising at roughly 5% per year, starting early and leveraging tax-free compound growth is the most effective strategy for keeping student debt out of your child's future.
Tax-Free Growth: The Core Advantage
The fundamental benefit of a 529 is that investment gains are never taxed at the federal level when used for qualified expenses. Consider $10,000 invested today at 7% for 13 years: it grows to approximately $23,500. In a taxable brokerage account, you would owe capital gains tax on the $13,500 gain — potentially $2,025 at the 15% rate. In a 529, that entire $23,500 is available for tuition, tax-free. Over a full 18-year horizon with regular monthly contributions, the tax savings can easily reach tens of thousands of dollars.
More than 30 states sweeten the deal further by allowing a state income tax deduction or credit for 529 contributions. For example, New York deducts up to $5,000/year ($10,000 for married couples), Illinois up to $10,000 ($20,000 married), and Virginia up to $4,000 per account per year with unlimited carry-forward. Check your state's plan for current limits — using your home state's plan is often optimal for the deduction, even if other states offer slightly better investment menus.
Qualified Expenses: What You Can Pay For
529 funds can be used for a wide range of education expenses without triggering taxes or penalties. At the college level, qualified expenses include tuition and fees, room and board (up to the school's published allowance), books and supplies, computers and related technology, and special needs services. For K-12 education, 529 funds can cover up to $10,000 per year in tuition at private, public, or religious schools. Registered apprenticeship programs and student loan repayments (up to $10,000 lifetime per beneficiary) were added as qualified uses under the SECURE Act.
SECURE 2.0: The 529-to-Roth IRA Rollover
One of the most significant changes to 529 plans in recent years is the SECURE 2.0 Act provision (effective January 2024) that allows unused 529 funds to be rolled over into a Roth IRA for the beneficiary. The rules: the account must have been open for at least 15 years; the lifetime rollover limit is $35,000 per beneficiary; annual rollovers cannot exceed the Roth IRA contribution limit ($7,000 in 2026); and only contributions and earnings that have been in the account for at least 5 years qualify. This provision effectively eliminates the fear of "over-saving" in a 529 — leftover funds can be converted into a tax-free retirement nest egg rather than being subject to the 10% penalty.
For parents who opened a 529 account shortly after birth, the 15-year requirement is met by the time the child turns 15 — meaning if there are unused funds after college, the rollover window opens. Use our Compound Interest Calculator to model how that $35,000 Roth rollover could grow over a 40-year career.
Superfunding: Front-Loading for Maximum Growth
The IRS annual gift tax exclusion for 2026 is $18,000 per beneficiary ($36,000 for married couples). But 529 plans have a unique "superfunding" rule: you can contribute up to $90,000 ($180,000 for couples) in a single year and elect to treat it as five equal annual gifts, avoiding gift tax entirely. This is reported on IRS Form 709. Superfunding is most powerful when a child is newborn — a $90,000 lump sum at birth grows to approximately $460,000 over 18 years at 7%, compared to $277,000 if spread as $18,000/year contributions. During the five-year election period, no additional annual-exclusion gifts can be made to the same beneficiary.
Frequently Asked Questions
A 529 plan is a tax-advantaged savings account sponsored by states and educational institutions, designed specifically for education expenses. Contributions are made with after-tax dollars, but all investment growth is federal-tax-free when funds are used for qualified education expenses — including tuition, fees, room and board, books, and K-12 tuition up to $10,000 per year. Over 30 states also offer a state income tax deduction or credit for contributions. There are no income limits to contribute, and contribution limits are very high (up to the cost of education, typically $300,000+).
Federal tax benefit: all investment growth inside a 529 plan is completely tax-free when used for qualified education expenses — you pay no federal capital gains tax or income tax on the earnings. State tax benefit: more than 30 states allow you to deduct 529 contributions from your state taxable income, or offer a tax credit. The annual gift tax exclusion for 2026 is $18,000 per beneficiary ($36,000 for married couples), and superfunding allows a $90,000 lump-sum contribution ($180,000 for couples) spread over 5 years for gift tax purposes.
Yes. Under the SECURE 2.0 Act (effective 2024), unused 529 funds can be rolled over to a Roth IRA for the beneficiary, subject to these rules: (1) the 529 account must have been open for at least 15 years; (2) the lifetime rollover limit is $35,000 per beneficiary; (3) annual rollovers are capped at the Roth IRA contribution limit ($7,000 in 2026) minus any other Roth contributions; (4) only contributions and earnings that have been in the account for at least 5 years are eligible. This eliminates the 10% penalty and income tax that would otherwise apply to non-qualified withdrawals, and converts leftover education savings into retirement savings tax-free.
You have several good options. First, change the beneficiary to another family member — a sibling, cousin, spouse, or yourself — with no tax consequence. Second, use funds for K-12 private school tuition (up to $10,000/year). Third, under SECURE 2.0, roll up to $35,000 lifetime into a Roth IRA for the beneficiary (15-year account rule applies). Fourth, withdraw the money and pay income tax plus a 10% penalty only on the earnings portion — your contributions always come out tax and penalty free. The Roth rollover option makes over-saving in a 529 far less of a concern than it used to be.
Superfunding allows you to make a lump-sum 529 contribution of up to $90,000 per beneficiary ($180,000 for married couples in 2026) and elect to treat it as five equal annual gifts for gift tax purposes. This lets you immediately invest a large sum to maximize compound growth. You report the election on IRS Form 709. During the 5-year period, you cannot make additional annual-exclusion gifts to the same beneficiary. Superfunding is most powerful when a child is newborn — a $90,000 lump sum invested at birth can grow significantly more than the same amount spread over 5 years of contributions.
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