See how a tax-advantaged 529 plan can grow your child's college fund versus a regular taxable brokerage account.
18 years at 7% annual return.
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Earnings grow tax-deferred and qualified withdrawals are federal-income-tax-free.
Most states offer a deduction or credit for contributions to the state-sponsored plan.
Aggregate limits are typically $300k–$575k per beneficiary depending on the state.
A 529 plan is a state-sponsored, tax-advantaged investment account designed for qualified education expenses — tuition, room & board, K–12 (up to $10k/yr), apprenticeships and even student loan repayments (up to $10k lifetime per beneficiary).
Contributions are made with after-tax dollars (no federal deduction) but earnings compound tax-free and qualified withdrawals avoid federal income tax. Many states layer on their own state-tax deduction for residents.
No — they cover qualified higher education at any eligible institution plus K–12 tuition (up to $10k/yr), apprenticeships, and up to $10k lifetime in student loan repayments per beneficiary.
You can change the beneficiary to another family member, hold the funds for later use, or withdraw — non-qualified withdrawals owe income tax plus a 10% penalty on earnings only. Since 2024, up to $35k can be rolled to the beneficiary's Roth IRA over time.
There is no federal deduction, but most states offer a deduction or credit for residents contributing to the state plan. Check your state's specific rules.
Annual gift-tax exclusion limits apply ($19k/donor in 2025; $95k via 5-year front-load). Aggregate plan ceilings range $300k–$575k+ per beneficiary depending on the state.
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