Tax lots
Use specific lots if possible. A low-basis sale can erase years of 529 tax advantage, while harvested losses can make a transfer much cleaner.
Brokerage to 529 decision model
Close call
This compares selling taxable funds now and investing the net amount in a 529 against leaving the same dollars in a brokerage account until the first education bill.
Expected advantage
$0
Immediate sale tax
$0
State contribution benefit
$0
Projected education need
$0
Account value over time
529 account value compared with taxable brokerage value after estimated liquidation tax.
529
Brokerage
At school start
$0
529 account value
At school start
$0
Brokerage after estimated tax
Gap
$0
Close
529 qualified-use case
$0
529 no-school case
$0
Taxable account before final sale
$0
What is moving the result
Model details
Taxes and laws change; the defaults are editable placeholders. The model does not optimize lots, apply the full capital gains worksheet, or replace tax advice. It is meant to expose the swing factors.
Variables worth checking before acting
State plan rules
Some states offer deductions or credits, some require in-state plans, and some recapture benefits after nonqualified withdrawals.
Aid ownership
A parent-owned taxable account and parent-owned 529 may be treated similarly for FAFSA assets. Student-owned or grandparent-owned money can change the aid math.
Education-tax credits
You generally cannot double count the same expenses for a tax-free 529 distribution and education credits. Reserve cash for credits if those credits are available.