[an error occurred while processing this directive] Products and Programs: 529 Plan Overview

Fidelity Advisor 529 Plan Overview

For most people, saving for college is every bit as important as saving for retirement. College costs have been rising faster than inflation,1 so it's important to find a savings vehicle that best positions you to meet your goals.

1. Bureau of Labor Statistics & "Trends in College Pricing," The College Board, 2004

The Fidelity Advisor 529 Plan may help you:

2. Diversification does not ensure a profit or guarantee against a loss.

Benefits Grow and Change Along with You

As Soon as You Open a Plan   As Your Plan Grows over Time   When the Child Is Ready for College
  • No income restrictions on participation
  • Name any beneficiary
  • Customize your investment strategy
  • Transfer assets in from other investments3
  • Potential accelerated gifting and estate planning benefits**
  
  • Any investment earnings are federal tax deferred
  • You maintain control over the assets in the account
  • Dollar cost averaging may help lower average unit price4
  • Your advisor manages your account, and Fidelity manages the Portfolios5
  
  • Withdraw assets federal income tax free for qualified higher education expenses6
  • Use the money at accredited colleges and universities nationwide7
  • May help with a more favorable federal financial aid decision compared to some other investment options
  • Change beneficiary for unused assets8
  1. Consult a financial or tax advisor regarding your specific financial situation.
  2. Dollar cost averaging does not ensure a profit or protect against a loss in declining markets.
  3. The Fidelity Advisor 529 Plan Portfolios are managed by Strategic Advisers,® Inc., a Fidelity Investments company.
  4. Pursuant to the Economic Growth and Tax Relief Reconcilliation Act of 2001 (EGTRRA), qualified distributions are federal income tax free. The provisions of EGTRRA will expire on December 31, 2010. Unless the law is extended by Congress and the President, the federal tax treatment of 529 Plans will revert to its status prior to January 1, 2002.
  5. Includes eligible foreign institutions.
  6. Some restrictions apply. See the Offering Statement for more details on changing a beneficiary.

Stay in Control

Unlike other college savings plan accounts, you are the account owner of a Fidelity Advisor 529 Plan account. If the beneficiary does not use the assets for education, you may change the beneficiary to another eligible member of the beneficiary's family or if necessary, take a nonqualified distribution.9

9. Any earnings on nonqualified distributions will be subject to income taxes at the Distributee's rate and a 10% federal penalty tax.

Save as Much as Possible

Any earnings on a 529 Plan grow tax deferred, which may help you make the most of your investment.

Taxable Investments May Fall Short of Your Goals

The hypothetical chart assumes the federal income tax-free distribution provision of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") will be extended beyond 12/31/2010, which requires further legislative action.

The hypothetical chart represents a comparison of an initial, up-front after-tax contribution of $35,000 along with monthly $375 after-tax investments for 18 years to a hypothetical 529 Plan account vs. a hypothetical taxable account. (Total amount invested over 18 years is $116,000.) Assumptions are as follows: Both accounts earn an 8% annual rate of return, compounded monthly, and monthly investments are made on the first day of each month. Earnings in the taxable account are taxed each year using a blended federal and state tax rate of 30%. This tax is netted against its respective earnings on 12/31 of each year. Local taxes, if any, and account fees and expenses are not taken into account. If account fees and expenses were deducted, performance would be lower.

The ending value of the 529 Plan account assumes all distributions will be used for qualified higher education expenses and are, therefore, federal income tax free. The 529 Plan account further assumes no state income taxes. If you are not a resident of the state sponsoring the 529 Plan, you may want to investigate whether your state offers its residents a plan with alternate tax advantages. Earnings on nonqualified distributions from 529 Plan accounts are taxable at the Distributee's income tax rate and are subject to a 10% federal penalty tax. Total gifts by any one person to another person in one year of more than the annual exclusion amount ($11,000 in 2005, $12,000 in 2006) may have a federal gift tax impact. Consult with a tax advisor regarding your specific situation. Systematic investing does not ensure a profit and does not protect again a loss in a declining market. Past performance is no guarantee of future results. This hypothetical is not intended to predict or project investment performance. Your own results will vary.

* The College Board, Trends in College Pricing 2004. Projection based on tuition and fees, room and board, books, and supplies assuming 5% annual inflation.

** The content provided herein is general in nature and is for informational purposes only. It is not intended to be, and should not be construed as (i) a recommendation, (ii) legal or tax advice, or (iii) a legal opinion. Laws of a particular state or laws which may be applicable to a particular situation may impact the applicability, accuracy, or completeness of this information. Tax laws and regulations are complex and are subject to change. Always consult an attorney or tax professional regarding your specific legal or tax situation. Fidelity makes no warranties with regard to the information provided or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, the information furnished therein.

The Sooner You Start, the Better

Each year you put off saving for college, your returns may diminish more than you might think. Learn more about how starting early may make a real difference.

Fidelity Advisor 529 Plan Cost of Waiting [PDF]

Informational Materials

Overview of 529 Plans [PDF]
Learn about the different savings vehicles before you see your advisor.

Fidelity Advisor 529 Plan Brochure [PDF]
Gain an understanding of the long-term potential benefits of this plan.

Fidelity Advisor 529 Offering Statement [PDF]
Please read the Offering Statement before making a decision about the Fidelity Advisor 529 Plan.

The Fidelity Advisor 529 Plan is offered by the State of New Hampshire and managed by Fidelity Investments. If you or the designated beneficiary are not a New Hampshire resident, you may want to consider, before investing, whether your or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the Plans' investment objectives, risks, charges, and expenses before investing. For this and other information on the Fidelity Advisor 529 Plan, call or write to Fidelity or visit advisor.fidelity.com for a free Offering Statement. Read it carefully before you invest or send money.

 
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