530A Withdrawal Tax Estimator

Enter the balance, basis, and tax bracket to see what your child could actually keep.

How 530A withdrawals are taxed

Here is the basic rule: withdrawals are taxed as ordinary income at the child's rate, minus after-tax basis. Basis is money that was taxed before it entered the account, such as personal contributions from parents or grandparents. The calculator uses this simplified formula: taxable = balance − basis, then tax = taxable × bracket, and finally net = balance − tax. Actual tax can also depend on deductions, other income, state rules, and the kiddie tax. A tax professional can calculate the amount for your family's situation.

An 18-year-old with little other income may owe less tax because of lower tax brackets and the standard deduction. The account does not have to be emptied at 18. It can remain invested under traditional IRA rules and continue growing. Withdrawals before retirement age may be subject to IRA penalties and taxes. See the age-55 estimate in the growth calculator, and check current guidance at IRS.gov and Treasury.gov.

Use this estimator with the withdrawal rules, the 529 comparison, and the custodial Roth comparison. This page estimates federal tax only and does not model every IRA aggregation, exception, or state rule. Consult a tax professional before acting on the estimate.

Worked example and important omissions

If an account balance is $45,000 and documented after-tax basis is $21,600, this simplified model treats $23,400 as taxable. Selecting a 10% marginal rate produces an estimated $2,340 of federal tax and $42,660 remaining. That arithmetic demonstrates the calculator; it does not establish the actual rate or tax treatment of a real distribution.

The estimate does not calculate the standard deduction, taxable income across brackets, state income tax, early-distribution exceptions or penalties, IRA aggregation rules, basis allocation across partial withdrawals, or changes in law. It also assumes the basis entered is supportable with records. Before a distribution, reconcile contribution records with account statements and current IRS instructions. If the basis exceeds the balance, the calculator limits the taxable portion to zero rather than modeling a deductible loss.

Use scenarios instead of one tax rate

The child’s future marginal rate is unknowable today. Run at least three cases: a low-income year, a middle case with wages or other income, and a higher-rate case. Then compare a full withdrawal with leaving some money invested. A marginal rate entered here applies to the entire simplified taxable amount, while a real return may spread income across brackets and deductions.

Basis deserves its own sensitivity check. Run the estimate with the amount supported by records, then with a lower amount to see the cost of missing documentation. Do not count market growth, the federal seed, or a third-party gift as personal after-tax basis unless current authority and account records support that treatment. The output is most useful for identifying which facts matter enough to verify before a distribution.