What does 529 refer to

If the donor dies within the five-year period, a portion of the transferred amount will be included in the donor's estate for estate tax purposes. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, Arizona or Connecticut resident, you may want to consider, before investing, whether your state or the 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. Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing.

For this and other information on any college savings plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view one online. Read it carefully before you invest or send money. As with any search engine, we ask that you not input personal or account information.

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Search fidelity. Investment Products. Why Fidelity. Print Email Email. Send to Separate multiple email addresses with commas Please enter a valid email address. Your email address Please enter a valid email address. Message Optional. What is a plan? Reach your college savings goals with a flexible, tax-advantaged plan.

Find out what information you'll need before you open an account Opens in a new window. Learn more about plan benefits. CSPN Overview. College Savings Month. State Agency. What is a Plan?

You are here: Home What is a Plan? Why State Plans Differ Each state that offers a plan determines how its plan is structured and which investment options are offered. Types of Plans There are two types of plans: Prepaid Tuition Plans There are currently 13 prepaid tuition plans sometimes called guaranteed savings plans offered by 12 states and the Private College Plan PC It is important to understand the fees and expenses associated with plans because they lower your returns.

Fees and expenses will vary based on the type of plan education savings plan or prepaid tuition plan , whether it is a broker- or direct-sold plan, the plan itself and the underlying investments. Some of these fees are collected by the state sponsor of the plan and some are collected by the plan manager. The asset management fees will depend on the investment option you select. Investors that purchase an education savings plan from a broker are typically subject to additional fees, such as sales loads or charges at the time of investment or redemption and ongoing distribution fees.

Fee Saving Tips. Many states offer direct-sold education savings plans in which savers can invest without paying additional broker-charged fees. In addition, some education savings plans will waive or reduce the administrative or maintenance fees if you maintain a large account balance, participate in an automatic contribution plan, or are a resident of the state sponsoring the plan. Some plans also offer fee waivers if the saver accepts electronic-only delivery of documents or enrolls online.

How does investing in a plan affect federal and state income taxes? Investing in a plan may offer savers special tax benefits. These benefits vary depending on the state and the plan. In addition, state and federal laws that affect plans could change.

You should make sure you understand the tax implications of investing in a plan and consider whether to consult a tax adviser. Many states offer tax benefits for contributions to a plan. These benefits may include deducting contributions from state income tax or matching grants but may have various restrictions or requirements. In addition, savers may only be eligible for these benefits if you invest in a plan sponsored by your state of residence.

If you use account withdrawals for qualified higher education expenses or tuition for elementary or secondary schools, earnings in the account are not subject to federal income tax and, in many cases, state income tax.

One of the benefits of plans is the tax-free earnings that grow over a period of time. The longer your money is invested, the more time it has to grow and the greater your tax benefits. You will lose some of these potential benefits if you withdraw money from a plan account within a short period of time after it is contributed.

What restrictions apply to an investment in a plan? There will likely be restrictions on any plan you may be considering. Education savings plans have certain pre-set investment options.