529 plan FAQs: Paying for school
Do I have to use the money at a state school?
No, you can use your 529 plan account assets at eligible colleges and universities in the United States and eligible foreign institutions.
What college expenses can I use the money for?
Money withdrawn from the 529 plan account can be used for a wide range of qualified higher education expenses, such as room and board, tuition, books, and computer equipment. Refer to your enrollment kit for a full list of expenses covered by your state's plan.
Do I have to use the money for college expenses only?
No, beginning in 2018, $10,000 per year can be applied toward tuition expenses for elementary, middle, and high schools (private, public, or religious). Although the money may come from multiple 529 accounts, it will be aggregated on a per beneficiary basis, and any distribution amount in excess of $10,000 will be subject to income and a 10% federal penalty tax.
How and when can I take distributions from the account?
You can always withdraw money from your 529 plan account. However, non-qualified withdrawals are subject to federal income tax and a 10% federal penalty tax. There may also be state or local income tax, interest and dividends tax, or the equivalent. Qualified withdrawals include money used to pay for room and board, tuition, and books. You may NOT take loans against your 529 plan account.
Distributions used for primary or secondary public, private, or religious educational institutions may be used only for tuition expenses.
You have several ways to withdraw money (take a distribution) from your Fidelity-managed 529 plan account:
- Transfer money from your 529 plan online to another Fidelity account or to an outside bank account. We have an easy-to-use transfer tool that can help. Once the transfer is made from the 529 account, use your preferred payment method to pay your qualified higher education expenses directly with the college or university. Start a transferLog In Required
- Pay college bills online by enrolling now in Fidelity BillPay® for 529 accounts
- Complete the College Investing Plan Distribution form (PDF)
- Call a Fidelity representative at 800-544-1914
For money sent to the beneficiary or directly to his/her school, a Form 1099-Q will go to the beneficiary, who will be considered the recipient of the money for tax purposes. For all other withdrawals, the participant will be considered to have received the money and will be sent a Form 1099-Q. Additional documentation (college invoice, statement, receipts) may be required by the IRS to verify that such payments are qualified.
How can I take a distribution from specific portfolios in my 529 account?
If you are invested in multiple portfolios and you would like to take a distribution from a specific portfolio in your 529 account you will need to complete the College Investing Plan Distribution form (PDF) or call a college planning representative at 800-544-1914.
Please be aware that withdrawing funds through the online transfer tool or with Fidelity BillPay results in a pro-rata sale across the portfolios you hold in the account. Fidelity BillPay is not available to pay tuition expenses at primary or secondary public, private, or religious educational institutions. For information on other distribution methods, visit Take a Distribution From Your 529 Account.
What if my child earns a scholarship?
You can withdraw the amount of the scholarship award from your 529 plan account without penalty; federal and state income taxes on the earnings still apply.
Will investing in a 529 plan affect eligibility for financial aid?
529 assets may have a relatively small effect on federal financial aid eligibility because they are considered assets of the parent (participant) in the Expected Family Contribution (EFC). Conversely, accounts that are considered assets of the child (beneficiary), such as an UGMA/UTMA account, tend to have a greater effect on federal financial aid eligibility in the EFC calculation. See financial aid planning for more information.
What is Fidelity BillPay® for 529 accounts?
Fidelity BillPay® for 529 accounts is a free online service that allows you to make single and recurring payments to colleges, tuition payment services, the account owner, or the beneficiary. To learn more, view the Fidelity BillPay for 529 Accounts demo. For questions regarding Fidelity BillPay for 529 accounts, please contact a Fidelity representative at 800-544-1914. Fidelity BillPay is not available to pay tuition expenses at primary or secondary public, private, or religious educational institutions. For information on other distribution methods, visit Take a Distribution From Your 529 Account.
Enroll now in Fidelity BillPay for 529 accounts.
Note: Fidelity BillPay for 529 accounts is not intended for custodial UGMA/UTMA use.
What do I need to know before paying college bills using Fidelity BillPay® for 529 accounts?
To facilitate bill payments to colleges, please include the following information when setting up the recipient of funds:
- The student ID or student account number from your tuition invoice
- The correct payment address, including any specific area or department name required by the school
When making your payment, bear in mind that the total market value of your account is based on the prior business day's market value of the portfolios in your 529 account. This market value may fluctuate between the time you enter your bill payment request and when the money is deducted from your account. If the payment request is not available due to a decrease in market value, you will be notified that your transaction was not accepted and you will need to resubmit your request. If you need to withdraw your entire account balance, please call a representative at 800-544-1914. Note: Payments will be deducted from your account on the withdrawal date.
For 529 accounts invested in multiple portfolios, the amount requested through Fidelity BillPay® for 529 accounts will be withdrawn from each portfolio held in your designated 529 account on a pro-rated basis. If you prefer to provide direction on the specific portfolio from which to deduct the requested amount, please call a representative at 800-544-1914 or fill out the College Investing Plan Distribution form (PDF).
How much time will it take for the school to receive my payment?
Please allow for a minimum of two weeks since it may take the school a period of a few days to process the check after it has been received.