Fidelity advisor-managed 529 college savings plans
Want to help families reach a key financial goal while adding value to your practice? Find out how Fidelity's 529 plans and college savings resources can help your clients meet their objectives.
Now's the time to position yourself as your clients' 529 savings plan expert
"What is a 529 savings plan?" "How can it help me save more effectively for college?" If you're getting questions like these from clients, you aren't alone.
Use answers to these common 529 plan questions to become a key resource for your clients.
Key benefits of a 529 college savings plan
With saving for college a top priority for many families, you have an opportunity to talk with clients about how a 529 college savings plan can help boost their efforts.
Tax advantages
Earnings grow tax deferred to pay for qualified expenses. Plans may offer income tax deductions on 529 contributions.
Control & flexibility
The account owner of a 529 plan maintains control over the investments and can change the beneficiary of the account to a family member of the original beneficiary.5
Estate tax & gifting
Assets gifted to a 529 plan are considered immediately removed from the contributor's estate, which may reduce or eliminate estate taxes.
New rollover options
You may transfer up to a lifetime limit of $35,000 to a Roth IRA established for a 529 account-designated beneficiary.3
Take a deeper dive into college savings insights with this pair of recent Fidelity research studies: The first focuses on parents’ college savings behaviors and expectations, and the second explores students’ views and experiences with college debt.
Your clients’ savings could get a boost when friends and family give gifts to their 529 accounts. Account savings have the potential to grow faster when grandparents, relatives, and friends can contribute.
Choose a 529 college savings plan that's right for your clients
Take a closer look at the three advisor-managed 529 plans Fidelity offers.
Fidelity Advisor 529
The Fidelity Advisor 529 Plan is available to residents across the United States. It is sponsored by the state of New Hampshire and offers tax-advantaged savings that could help families save for higher education.
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CHET Advisor 529
The CHET Advisor 529 Plan offers residents of Connecticut in-state tax benefits that help families and individuals in planning for the cost of higher education.
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OklahomaDream 529
The OklahomaDream 529 Plan offers residents of Oklahoma in-state tax benefits while helping families save for qualified educational expenses.
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College savings tools & calculators
Quickly illustrate different planning scenarios for your clients so you can help them reach their college savings goals.
College Savings Planner
Obtain a personalized projection of your clients' future college costs by entering their child's age, the type of college they're saving for, and their household income.
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State Tax Deduction Calculator
Quantify your clients' state tax deductions or credits over the long term, given their planned contributions, taxable income, and filing status. Clients can weigh this factor alongside investment performance contribution limits and other variables.
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Financial Aid Calculator
Determine your client's Expected Family Contribution (EFC) for the school year ahead based on their family details, income, savings, and investments.
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Want to know more?
Let's talk about advisor-managed 529 plans for your clients.
Explore our latest research & insights
1. The Setting Every Community Up for Retirement Enhancement (SECURE) Act. The definition of qualified higher education expenses for 529 plans expanded to include amounts paid as principal or interest on any qualified education loan of a 529 plan designated beneficiary or a sibling of the designated beneficiary. The amount treated as a qualified expense is subject to a lifetime limit of $10,000.
2. Up to $10,000 per taxable year in 529 account assets per beneficiary may be used for tuition expenses in connection with enrollment at a public, private, or religious elementary or secondary educational institution. Although the assets may come from multiple 529 accounts, the $10,000 qualified withdrawal limit will be aggregated on a per beneficiary basis. The IRS has not provided guidance to date on the methodology of allocating the $10,000 annual maximum among withdrawals from different 529 accounts. Some states do not conform with federal tax law. Please check with your home state to determine if it recognizes the expanded 529 benefits afforded under federal tax law, including distributions for elementary and secondary education expenses, apprenticeship programs, and student loan repayments. You may want to consult with a tax professional before investing or making distributions.
3. Beginning January 2024, the Secure 2.0 Act of 2022 (the "Act") provides that you may transfer assets from your 529 account to a Roth IRA established for the Designated Beneficiary of a 529 account under the following conditions: (i) the 529 account must be maintained for the Designated Beneficiary for at least 15 years, (ii) the transfer amount must come from contributions made to the 529 account at least five years prior to the 529-to-Roth IRA transfer date, (iii) the Roth IRA must be established in the name of the Designated Beneficiary of the 529 account, (iv) the amount transferred to a Roth IRA is limited to the annual Roth IRA contribution limit, and (v) the aggregate amount transferred from a 529 account to a Roth IRA may not exceed $35,000 per individual. It is your responsibility to maintain adequate records and documentation on your accounts to ensure you comply with the 529-to-Roth IRA transfer requirements set forth in the Internal Revenue Code. The Internal Revenue Service (“IRS”) has not issued guidance on the 529-to-Roth IRA transfer provision in the Act but is anticipated to do so in the future. Based on forthcoming guidance, it may be necessary to change or modify some 529-to-Roth IRA transfer requirements. Please consult a financial or tax professional regarding your specific circumstances before making any investment decision.
4. Source: Savingforcollege.com, 2022.
5. See an Offering Statement for more details on changing beneficiaries.
Federal law requires that all investments in a 529 account be made in cash.
Fidelity Investments & Pyramid Design and Fidelity Investments 529 College Rewards are registered service marks of FMR LLC.
529 Plan accounts are not insured by any state, federal government, or any federal agency. Furthermore, neither the principal nor any investment return is guaranteed by any state, federal government, or any federal agency.
Please note that 529 plans may have certain fees and expenses including but not limited to annual maintenance fees, sales charges, deferred sales charges, administration, state, and management fees, and underlying fund expenses. Please consider these fees as well as the investment risks when investing in a 529 plan.
Information provided is general (and educational) in nature. It is not intended to be, and should not be construed as, legal or tax advice. Fidelity does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Consult an attorney or tax advisor regarding your specific legal or tax situation.
If the designated beneficiary is not a New Hampshire, Oklahoma or Connecticut resident, you may want to consider, before investing, whether the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits, such as financial aid, scholarship funds, and protection from creditors.
Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.
The Fidelity Advisor 529 Plan, OklahomaDream 529 Plan, and CHET Advisor 529 Plan are offered by the state of New Hampshire, the state of Oklahoma, and the state of Connecticut, respectively and managed by Fidelity Investments. If your client or the designated beneficiary is not a New Hampshire, Oklahoma, or Connecticut resident, your client may want to consider, before investing, whether their state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits, such as financial aid, scholarship funds, and protection from creditors.
Before investing, consider the plans' investment objectives, risks, charges, and expenses. Contact Fidelity for a free Offering Statement. Read it carefully before investing.