529 or a brokerage account?
Both can grow your money. The difference is what happens when you use it. See the potential tax advantage of a 529 for education, and the flexibility you get with a regular brokerage account.
Nothing calculated yet
Enter your situation above, then run the comparison.
The trade-off in one sentence
A 529 gives you tax-free growth if the money is spent on qualified education. A brokerage account gives you no such benefit and no such condition. The entire comparison is how much that tax advantage is worth against how much the flexibility is worth.
Which wins is therefore not a fixed answer — it depends on how confident you are that the money will actually go to education, and on how long it has to grow. The longer the horizon, the more there is to tax, and the larger the 529’s advantage becomes.
What the comparison deliberately simplifies
Tax on the brokerage side is calculated as gain over principal, taxed once at the end. That omits the annual drag of taxable dividends, which a real taxable account would pay along the way.
This matters for how you read the result: the simplification understates the 529’s advantage rather than overstating it. If the 529 comes out ahead here, it would come out further ahead under a fuller model. The bias runs in the conservative direction, which is the direction a comparison like this should err.
The flexibility side of the ledger
The brokerage account’s advantage does not show up as a number, which makes it easy to undercount. Money there can go to a house, a business, a gap year or an emergency without any tax consequence beyond ordinary capital gains. Money in a 529 spent on those things carries income tax on the earnings plus the 10% additional federal tax. The comparison shows you the cost of that flexibility; only you can price the benefit.
Common questions
- Is a 529 better than a regular brokerage account?
For money that will certainly be spent on qualified education, the 529’s tax treatment is difficult to beat. For money that might be needed for something else, the brokerage account’s lack of conditions has real value. The tool quantifies the first half of that trade; the second half is a judgement about your own circumstances.
- What if my child doesn't go to college?
The money is not lost. Beneficiaries can generally be changed to another qualifying family member, the account can be held for a future student, and a limited amount may be rolled into the beneficiary’s Roth IRA. A non-qualified withdrawal remains available at the cost of income tax on earnings plus the 10% additional tax. The leftover-money tool ranks these routes.
- Do 529 plans affect financial aid?
They can, and the treatment differs depending on who owns the account. This site does not model financial aid, so it makes no claim about the effect on your position — StudentAid.gov and your school’s financial aid office are the authoritative sources.
Same numbers, different question
- Should I stop contributing to my 529?Compare all four contribution paths at once
- Am I on track?See your funding ratio and what would close the gap
- Am I putting too much into my 529?Check whether your current path overshoots
- How much should I contribute each month?Work backwards from the bill to a monthly number
- How should I split savings between my children?Work out the split that levels your children up
- I have leftover 529 money. Now what?Rank the reuse, rollover and withdrawal pathways