FAQs: How to Take Distributions From Your 529 College Savings Plan
Is there another way—other than BillPay—to set up education payments to go directly to the school or to my beneficiary?
Yes, although Fidelity BillPay® is the most efficient way to make online payments, you can choose to set up ongoing payments using the Standing Payment Instructions – 529 College Savings Plan form (PDF). If you use this form, your payment instructions remain on record here so you can use them over again. However, you'll need to call us to request each distribution payment.
What’s the difference between Standing Payment Instructions and the 529 Withdrawal form?
Use the Standing Payment Instructions – 529 College Savings Plan form (PDF) if you want to establish a specific set of instructions to be associated with your account. You will need to complete this form if you want your distributions to go to your beneficiary’s bank account using electronic funds transfer. Use the Withdrawals – 529 College Savings Plan form (PDF) if you have more than one portfolio and want to provide direction on the specific portfolio to deduct the payment from, or if you want to take a one-time distribution (either full or partial) from a specific portfolio and prefer to make the request by mail.
What is Fidelity BillPay® for 529 accounts?
Fidelity BillPay for 529 accounts is an online service that allows you to make single and recurring payments to colleges, tuition payment services, the account owner, or the beneficiary.
What is the fee for Fidelity BillPay® for 529 accounts?
Fidelity BillPay for 529 accounts is a free online service.
What kind of bills can I pay using Fidelity BillPay® for 529 accounts?
Money from a 529 account can be used, without penalty, for qualified higher education expenses, which include tuition, books, room and board, etc. Distributions for non-qualified expenses may incur federal income tax and a 10% federal penalty tax. Fidelity recommends that you retain records of payments for qualified higher education expenses in order to prepare your income tax returns. Payments made to recipients other than the account beneficiary, college, or university, or tuition payment service will be reported as such on Form 1099-Q for tax reporting purposes. Additional documentation (college invoice, statement, receipts) may be required by the IRS to verify that such payments are qualified.
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 payee:
- Enter the account number from your tuition invoice in the account number field.
- Correct payment address, including any specific area or department name required by the school.
The total market value of your 529 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 amount is deducted from your account. If the amount of 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 rata basis. If you prefer to provide direction on the specific portfolio to deduct the requested amount from, please call a representative at 800-544-1914 or fill out the Withdrawals – 529 College Savings Plan form (PDF).