529 College Savings Calculator
Project your 529 balance, college cost, shortfall, and state tax benefit
Last updated: November 2025 · Includes SECURE 2.0 §126 529-to-Roth rollover and 2026 gift exclusion ($19,000)
Child & Plan Details
$3,600 per year
Default $30,000/yr reflects 2024-25 public 4-year in-state average tuition + room and board (College Board)
Many families target 50% from savings, 30% from current income, 20% from loans/scholarships
California does not offer a state income-tax deduction or credit for 529 contributions, either because there is no state income tax or because the legislature has not enacted a 529 benefit.
529 Growth Projection
529 Summary
SECURE 2.0 §126 - 529 to Roth IRA Rollover
Starting in 2024, unused 529 funds may be rolled to a Roth IRA owned by the 529 beneficiary, with a $35,000 lifetime cap. The 529 must be at least 15 years old, the beneficiary must remain the same, annual rollovers cannot exceed the IRA contribution limit ($7,500in 2026), and contributions made in the past 5 years are not eligible. This effectively eliminates the long-standing "what if my child doesn't go to college" risk of overfunding a 529.
Understanding 529 College Savings Plans
How 529 Plans Work
A 529 plan is a tax-advantaged investment account sponsored by a state or educational institution and designed to encourage saving for future education costs. Contributions are not federally deductible, but earnings grow tax-deferred and qualified withdrawals are completely federal tax-free. More than 30 states offer their own income-tax deduction or credit on contributions to that state's 529 plan, often the most immediate financial benefit. There are no annual contribution limits, only aggregate per-beneficiary lifetime caps set by each plan (typically $300,000 to $550,000).
Qualified Education Expenses
Qualified higher-education expenses include tuition, mandatory fees, required books and supplies, computers and software, and room and board (for at least half-time students, up to the school's published cost-of-attendance figure). Federal law expansions also cover up to $10,000 per year in K-12 tuition, up to $10,000 lifetime in student loan repayments per beneficiary (plus another $10,000 per sibling), and registered apprenticeship program costs. Some state plans treat K-12 or loan repayments differently for state tax purposes, check your state plan's rules before withdrawing.
Gift Tax and 5-Year Superfunding
Contributions to a 529 are completed gifts to the beneficiary. The 2026 annual gift exclusion is $19,000 per donor per beneficiary, or $38,000 for married couples electing gift-splitting. 529 plans uniquely allow IRC §529(c)(2)(B) "5-year superfunding": you can front-load up to 5 annual exclusions in a single year ($95,000 per donor, $190,000 per married couple in 2026) and report the election on Form 709 to treat it as if you contributed ratably over 5 years. The assets leave your taxable estate immediately, but you retain control as the account owner, an unusual combination favored by estate planners.
Non-Qualified Withdrawals and Penalties
Withdrawals not used for qualified education expenses are subject to ordinary income tax on the earnings portion (not the contributions you put in) plus a 10% federal penalty on those earnings. Important exceptions waive the 10% penalty (but not the income tax): the beneficiary receives a tax-free scholarship (penalty waived up to the scholarship amount), attends a U.S. service academy, dies, or becomes disabled. Most state tax benefits are also recaptured on non-qualified withdrawals.
529 vs Other Education Savings Options
Compared with a Coverdell ESA ($2,000 annual limit, income limits), Custodial UTMA/UGMA accounts (no tax shelter, child gains control at 18/21), or a Roth IRA used for college (counts as income on FAFSA, opportunity cost of using retirement savings), a 529 generally wins on tax efficiency, contribution flexibility, and financial-aid treatment. The FAFSA Simplification Act (fully effective 2024-25) also closed the "grandparent loophole," meaning grandparent-owned 529 distributions no longer count as student income, making grandparent-funded 529s a much stronger gifting vehicle than before.
Frequently Asked Questions
Should I use a 529 plan or a Roth IRA for college savings?
A 529 plan is purpose-built for education: tax-deferred growth, tax-free qualified withdrawals, and a state income-tax deduction or credit in 30+ states. A Roth IRA is more flexible (you can keep the money for retirement) but capped at $7,500/yr in 2026 and the earnings on non-education withdrawals are taxable. Many families use both: a 529 for the bulk of college savings and a Roth IRA as backup.
What are qualified expenses for a 529 plan?
Tuition, fees, room and board (half-time+ students), books, supplies, required equipment including a computer and software, special-needs services. Federal expansions also cover up to $10,000/yr in K-12 tuition, up to $10,000 lifetime in student loan repayments per beneficiary (plus $10,000 per sibling), and registered apprenticeship program expenses.
What are the gift tax implications and how does 5-year superfunding work?
529 contributions are completed gifts. 2026 annual exclusion is $19,000/donor/beneficiary ($38,000 MFJ). IRC §529(c)(2)(B) lets you front-load 5 years of annual exclusions in one year ($95,000 single, $190,000 MFJ in 2026) and elect on Form 709 to spread ratably over 5 years. Assets leave your estate immediately but you keep control as account owner.
What if my child gets a scholarship or doesn't go to college?
Scholarship: you can withdraw up to the scholarship amount without the 10% penalty (income tax still applies on earnings). Other options: change the beneficiary to another family member, use $10,000 for student loans, hold for grad school or a grandchild, or roll up to $35,000 lifetime to the beneficiary's Roth IRA under SECURE 2.0 §126.
How does the SECURE 2.0 529-to-Roth rollover work?
Starting January 1, 2024: roll unused 529 funds to a Roth IRA owned by the 529 beneficiary. Limits: 529 must be open 15+ years, $35,000 lifetime cap per beneficiary, annual rollover cannot exceed the IRA contribution limit ($7,500 in 2026) and counts toward it, contributions/earnings from the last 5 years are not eligible.
Who should own the 529 plan?
Parent-owned 529s are reported as parental assets on the FAFSA (assessed up to 5.64%). Since FAFSA Simplification took full effect for 2024-25, grandparent-owned 529 distributions no longer count as student income either, so the historic "grandparent loophole" is closed and grandparent ownership now works well too. State tax deductions usually require the contributor to be the account owner.