Fidelity InstitutionalSM offers college savings plans that enable financial intermediaries to help their clients reach their higher education savings goals.
Our nationally distributed 529 plan offers an array of benefits including a broad range of investment options and a high contribution limit to help families save for qualified education costs.
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.
The OklahomaDream 529 Plan offers residents of Oklahoma in-state tax benefits while helping families save for qualified educational expenses.
Communicate 529 Plan Benefits
- Earnings grow tax deferred.
- The tax code allows taxpayers to pay up to $10,000 per student per year in K–12 tuition.2
- Qualified distributions are federal income tax free. Money not used for qualified expenses will be subject to a 10% federal tax.
- If a student gets a scholarship, the amount of the award can be withdrawn without the 10% federal tax. Just pay ordinary income tax on the earnings.
- Assets may be used to repay up to $10,000 in student loans for the beneficiary or a sibling of the beneficiary.3
- Distributions are tax free for qualified expenses associated with a beneficiary enrolled in a registered apprenticeship program.4
Control and Flexibility
- The account owner controls the account and authorizes the withdrawals, even after the beneficiary turns 18.
- There are no income requirements for opening an account.
- The account owner can change the beneficiary of the account to a family member of the original beneficiary.6
- The account owner has the flexibility to use the assets at most accredited colleges and universities.1,2
Estate Tax and Gifting Benefits
- Contribute up to $75,000 ($150,000 per married couple) per beneficiary in a single year without the money being subject to the federal gift tax.5
- Assets gifted to a 529 plan are considered immediately removed from the donor’s estate, which may help reduce or eliminate estate taxes.
- Accelerated gifts may result in a larger 529 plan account balance over time, thanks to compounding.
- 1. Includes many vocational and technical schools and eligible foreign institutions.
- 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.
- 3. 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. This provision is applicable to distribution made after December 31, 2018.
- 4. SECURE Act. The definition of 529 plan qualified higher education expenses expanded to include expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act. This provision is applicable to distribution made after December 31, 2018.
- 5. In order for an accelerated transfer to a 529 plan (for a given beneficiary) of $75,000 (or $150,000 combined for spouses who gift split) to result in no federal transfer tax and no use of any portion of the applicable federal transfer tax exemption and/or credit amounts, no further annual exclusion gifts and/or generation-skipping transfers to the same beneficiary may be made over the five-year period, and the transfer must be reported as a series of five equal annual transfers on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. If the donor dies within the five-year period, a portion of the transferred amount will be included in the donors estate for estate tax purposes.
- 6. 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.
- 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 beneficiarys 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.
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