How the 529 plan calculator works
The calculator grows your starting balance and each monthly contribution at the return you enter, compounded monthly. Contributions are added at the end of each month. The projected balance is:
Balance = S × (1 + r)n + M × ((1 + r)n − 1) ÷ r
S is the starting balance, M is the monthly contribution, r is the yearly return divided by 12, and n is the number of months. Everything you put in is counted as contributions. The rest of the balance is growth.
The return is the big unknown. 529 education savings plans usually invest in mutual funds, and their value can go up or down. Enter a return after fees, and try more than one rate.
529 basics, from official sources
- A 529 plan is a tax-advantaged savings plan for education costs, sponsored by states, state agencies or schools. There are two types: prepaid tuition plans and education savings plans. (Investor.gov, SEC)
- Earnings aren't subject to federal tax when used for qualified education expenses, such as tuition, fees, books, and room and board. Contributions aren't deductible on your federal return. (IRS 529 plan Q&A)
- State tax rules, plan fees and investment choices differ by plan. Check your state's plan documents.
This calculator doesn't model taxes, state deductions or withdrawals. It shows the math of steady contributions at a steady return.
Worked example
You put $100 a month into a 529 from birth, with no starting balance, and assume a 6% yearly return.
After 18 years (216 months), the account holds about $38,735. You contributed $21,600. Growth makes up the other $17,135.
With the prefilled numbers, a $2,000 start plus $150 a month at 6% for 18 years, the balance is about $63,977, of which $34,400 is your money.
Common questions
What return should I assume for a 529?
No one can promise a return. Plans offer different funds, and age-based options usually shift toward safer, lower-return investments as college gets closer. Run the calculator at a low and a high rate, and subtract your plan's fees from the rate you enter.
Are 529 earnings tax-free?
Earnings aren't subject to federal tax when used for qualified education expenses, according to the IRS. Your state may add its own rules or a deduction. Check the plan's documents before you count on a tax benefit.
Why does growth matter so much over 18 years?
Growth earns growth. Money added early has the most months to compound. At 6%, a dollar invested at birth grows to about $2.94 by age 18. A dollar added at 17 grows to about $1.06.
Does this include the effect of fees?
Only if you include them. Subtract the plan's yearly fees from the return. For example, if you expect 6% and the fund charges 0.3%, enter 5.7%.
What if we start saving later?
You have fewer months for growth to build. At 6%, $150 a month for 10 years grows to about $24,582. The same $150 a month for 18 years grows to about $58,103. Change Years until college to try your own timeline.