1. What is a 529 College Savings Plan?

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. The calculator helps estimate the future value of regular contributions to such a plan.

2. How Does the Calculator Work?

The calculator uses the future value of an annuity formula:

Where:

• \( FV \) — Future value of the investment (USD)
• \( PMT \) — Annual contribution amount (USD)
• \( r \) — Annual growth rate (decimal)
• \( n \) — Number of years

Explanation: The formula calculates how a series of regular investments will grow over time with compound interest.

3. Importance of College Savings Planning

Details: Early and consistent saving for college can significantly reduce future financial burden. The power of compounding makes starting early particularly valuable.

4. Using the Calculator

Tips: Enter your planned annual contribution, expected annual return rate, and number of years until college. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a realistic growth rate for a 529 plan?
A: Historically, college savings plans invested in age-based portfolios have returned 5-7% annually, but results vary.

Q2: Are 529 plan earnings tax-free?
A: Yes, when used for qualified education expenses, earnings are free from federal taxes and often state taxes too.

Q3: What if my child doesn't go to college?
A: Funds can be transferred to another beneficiary or withdrawn (with tax penalties on earnings).

Q4: Does this account for increasing contributions?
A: No, this assumes fixed annual contributions. For increasing contributions, use a more advanced calculator.

Q5: What expenses qualify under 529 plans?
A: Tuition, fees, room and board, books, supplies, and required equipment at eligible institutions.