HSA and 529 Growth with Tax Treatment Calculator

Purpose and model boundary

This calculator compares a 529 plan or an HSA with an ordinary taxable account that costs you the same amount out of pocket each year. It simulates 100 possible sequences of yearly market returns. The main result is the median account balance when the money is withdrawn; the page also shows the tax saved on contributions, the median after-tax advantage and the taxes paid or saved at contribution, during growth and at withdrawal.

For a single steady-return projection instead, use the College Savings 529 Planner or the HSA Savings and Tax Benefit Calculator. Those calculators answer different questions and do not simulate market-return sequences.

The model is educational. It is not a prediction of returns or tax law, and it is not financial, investment, tax or legal advice.

Inputs and units

Choose one account, a level yearly contribution, the number of years until withdrawal, an expected return and its volatility, your tax rates, and whether the withdrawal is for qualified expenses. The contribution goes in at the start of each year. The whole balance comes out at the end of the last year. The state deduction cap applies only to a 529 plan; the optional payroll-tax rate applies only to an HSA. Blank cap means the full 529 contribution is eligible for the model's state deduction, and blank payroll rate means no payroll saving.

The workbook always runs 100 futures. Its optional seed defaults to 42 for the worked examples. On the page, Simulate uses the last result's next seed before a repeated run, while the first run after a worked example or Reset uses that example's seed. API and MCP callers can supply a seed to reproduce a run.

Governing relationships

One seeded generator gives each future a separate part of its stream. Each draw becomes a yearly lognormal growth factor matched to the entered expected return and volatility. The same year's return is applied to the chosen and taxable accounts within a future.

The taxable account receives the yearly contribution minus the chosen account's contribution-tax saving. Its dividends are taxed each year. Remaining gain is taxed when the account is sold at withdrawal; the model does not tax a loss as a gain. The chosen account's qualified withdrawal has no modeled withdrawal tax. For other uses, the model applies the entered income-tax rates and, when selected, the additional tax applicable to that account. A 529 plan's non-qualified withdrawal tax applies to earnings, while an HSA's applies to the whole withdrawal.

Calculation sequence

The workbook calculates 100 futures, then derives the year-by-year percentiles, medians, tax totals and after-tax comparison. A repeated Simulate action uses the last result's next seed before the new run.

Outputs and interpretation

The account-balance chart shows the 10th, 25th, median, 75th and 90th percentiles by year, plus what was contributed to date. The tax chart shows average tax across futures at each of the three points; a bar below zero means tax saved. Its table includes a total row. These averages add across points, whereas the headline account balance and advantage are medians across futures.

Validation and status logic

The workbook evaluates the conditions below from top to bottom and returns the first matching status. This is the workbook's priority order, including warnings that may accompany a computed result.

NOT VALID is a refusal, not a numeric answer. CHECK may accompany a computable result but calls for the stated review. The self-check is separately reported as arithmetic-integrity evidence; it does not replace this ordered status chain.

Assumptions and limitations

Balances are nominal. The model uses one flat return distribution and flat tax rates, with no starting balance, changing yearly contribution, employer HSA contribution, multi-year withdrawal, fund-fee input or changing tax law. Enter an expected return after fund fees. It does not model recapture of state 529 deductions, California or New Jersey tax on HSA growth, 529 rollovers, or state credits in place of deductions. A CHECK on an HSA contribution compares it with a dated 2026 upper-limit figure; it is not a personal eligibility determination.

Restrictions and non-computing states

This calculator enforces its numeric and choice limits before it accepts a result. An irrelevant optional tax input does not turn an otherwise valid scenario into NOT VALID; a retained seed remains part of every simulation.

Errors and warnings

A request rejected by the page's input limits is not a computed result. A transport or service failure cannot establish a fresh workbook answer. Review the workbook's References and Disclaimer and current tax rules with a qualified professional before using a result for a real decision.

Sources and further reading

The model's amounts, rates and return assumptions come from the inputs, not market data. The workbook's References sheet identifies the calculation sources and dates its statutory constants. The links below explain those rules; they do not endorse this calculator.

• The IRS 529 education-savings guidance explains qualified education expenses and tax treatment of distributions. The model distinguishes qualified use from other withdrawals and taxes only the earnings portion of a non-qualified 529 withdrawal.
• IRS Publication 969 explains HSA contributions and distributions, including the additional tax on distributions not used for qualified medical expenses and its exceptions.
• Revenue Procedure 2025-19 gives the 2026 HSA contribution limits used for the workbook's advisory CHECK. Eligibility and an individual's limit depend on circumstances not all entered here.
• S. K. Park and K. W. Miller, “Random number generators: good ones are hard to find,” Communications of the ACM 31(10), 1988, and the Park–Miller–Stockmeyer 1993 correspondence describe the generator family. The workbook uses multiplier 48,271 and modulus 2³¹ − 1.
• The NIST/SEMATECH e-Handbook's lognormal distribution section and Microsoft Support's NORM.S.INV and PERCENTILE.INC documentation describe the distribution and percentile functions used by the workbook.

This is an educational estimate, not financial, investment, tax or legal advice. Tax rules can change; check current rules and your circumstances with a qualified professional.