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.

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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.

What is a 529 savings plan?
What is a 529 savings plan?

A 529 plan is a tax-advantaged investment option designed to help you save for the education expenses of a beneficiary. Get more details here.
How can the tax advantages of 529 plans help me?
How can the tax advantages of 529 plans help me?

Withdrawals from a 529 plan are free from federal income taxes when the money in the account is used for qualified educational expenses, such as tuition, room, and board. Also, your earnings grow tax deferred.
What are 529 plan qualified education expenses?
What are 529 plan qualified education expenses?

In addition to higher education expenses, you can use the funds to repay up to $10,000 in student loans for the beneficiary or their sibling.1 You can also use 529 plan assets for K-12 tuition and certain apprenticeship costs up to $10,000 per year tax free.2
Is there a gift tax on 529 contributions?
Is there a gift tax on 529 contributions?
529 plans allow a donor to make five years’ worth of gifts in one year without incurring the gift tax. This accelerated gifting rule also reduces the size of the donor’s estate, potentially reducing estate taxes.
How do the new 529 tax rules affect Roth IRA rollover options?
How do the new 529 tax rules affect Roth IRA rollover options?

Starting in 2024, the new SECURE 2.0 Act allows 529 account owners to roll over an aggregate lifetime limit of $35,000 from a 529 plan into a Roth IRA for the benefit of the 529 plan beneficiary.3
What should I know about financial aid and 529 plans?
What should I know about financial aid and 529 plans?

While some investors believe that saving too much in a 529 plan can hurt their potential financial aid awards, there is in fact minimal impact on financial aid. Parent-owned 529 plan assets are considered a parental asset and are factored into federal financial aid formulas at a maximum rate of 5.6% (vs. student-owned assets that are assessed as high as 20%).4

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

Recent Fidelity studies to help you work with clients on college savings

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.

College savings study Student debt study
Gifting into 529 plans

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.

Explore gifting options

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.

Learn more

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.

Learn more

OklahomaDream 529

The OklahomaDream 529 Plan offers residents of Oklahoma in-state tax benefits while helping families save for qualified educational expenses.

Learn more

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.

Learn more

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.

Learn more

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.

Learn more

Want to know more?

Let's talk about advisor-managed 529 plans for your clients.

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Explore our latest research & insights

The right information to help you work smarter, stand out from the competition, and stay focused on the future.
RESEARCH
How to Spend from a 529 College Plan
The right way reduces taxes, avoids penalties, and won't jeopardize financial aid.
RESEARCH
The Secure 2.0 Act of 2022 Passes
This article summarizes the key provisions of interest to plan sponsors, including which changes are required, which are optional (and will require decisions by sponsors as to whether to adopt or not), and the respective effective dates.
INSIGHTS
Investment and industry insights to power your growth
Build your practice, stand out from the competition, and prepare for the future by leveraging our market commentary, research, and practice management ideas.

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.

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