Fidelity Investments - Compare College Savings Options

Income Tax Benefits

Does the plan allow you to take federal income-tax-free qualified distributions? Does the plan allow you to defer taxes on any earnings until the money is withdrawn? The benefits of tax-deferred investment may give your assets a chance to grow faster than they would in a comparable taxable account.

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Tax-deferred growth of any earnings (no taxes are due until the funds are withdrawn) Federal income tax-free qualified distributions	No tax-deferred growth At least part of the investment earnings may be exempt from federal income tax, and some or all may be taxed at the child's generally lower rate³	Tax-deferred growth Tax-free qualified distributions

Gift and Estate Tax Benefits

Does the account offer special gift tax benefits?

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Individuals can gift up to $65K ($130K per married couple) per Beneficiary in a single year without incurring gift tax²	Standard $13K annual ($26K/couple) gift tax exclusion applies	N/A - $2,000 contribution limit per designated beneficiary
Money contributed to a 529 Plan account is generally considered removed from the owner's (Participant's) estate²

Ownership and Control

Who controls the account, the student or the account owner (i.e. parent)? Are there penalties for non-education withdrawals? Can assets be transferred to others in the family?

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Revocable gift	Irrevocable gifts	Irrevocable gifts
Parent (participant) controls the account; child is beneficiary	Custodian controls the investment until s/he transfers the account to the former minor	Parent (account owner) controls the account; child is beneficiary
Can transfer account at any time to benefit another member of original designated beneficiary's family¹	Cannot be transferred to another child (beneficiary)	Parent (owner) may transfer account to another family member (beneficiary)
May only be used for college related expenses including tuition, books, etc.⁵	Assets must be used for the benefit of the child, but can include non-college expenses	May only be used for education (college or K-12) expenses
Can withdraw up to the amount of an awarded scholarship without incurring federal penalty tax.	Withdrawals can be made at any time	Can only withdraw money for the benefit of the child non-education uses will incur a penalty
Can withdraw money anytime. Any earnings on nonqualified distributions will be subject to federal income taxes at the distributee's rate as well as a 10% federal penalty tax.

Financial Aid

Who is considered the owner of the account? Since most federal financial aid formulas consider about 5% of parents' assets and 20% of a child's assets available for college, accounts with assets controlled by the parent, like 529 Plan accounts, have a lower impact on financial aid.

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Account is considered asset of the parent (participant), not child (beneficiary)	Account is considered asset of the child (minor)	Account is considered asset of the parent (account owner), not child (beneficiary)
Lower weighting in financial aid eligibility formulas	Higher weighting in financial aid eligibility formulas	Lower weighting in financial aid eligibility formulas

Investment Strategy

Who makes the investment decisions? Managing your own college savings plan account allows you more control, but may also carry more risk. A professionally managed plan, like a 529 Plan managed by Fidelity, may help ease some of the burden of managing the account.

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Parent (participant) chooses from portfolios with different exposure to equity and fixed income	Custodian controls the investment until s/he transfers the account to the former minor	Parent makes the investment decisions
Assets are professionally managed in portfolio(s) of well-known Fidelity mutual funds	Account can invest in mutual funds and individual securities, including stocks and bonds	Account can invest in mutual funds and individual securities, including stocks and bonds (as available through the sponsoring institution)

Contribution Limits and Other Features

What are the maximum contribution levels for the account? Who can contribute? What are the fees and minimums for contributing to the account?

529 College Savings Plan	UGMA/UTMA (Custodial Account)	Coverdell Ed. Savings *Not offered by Fidelity
Low initial minimum investment. With a Fidelity managed 529 Plan participants can open an account with as little as $15 with automatic monthly contributions	$2,500 minimum at Fidelity	Account minimums vary by firm
High maximum contribution limits, e.g., $330,000 for the New Hampshire Fidelity managed 529 accounts*	No contribution limit (however gift taxes may apply beyond certain amounts, see Gift and Estate Tax Benefits tab)	Maximum $2,000 annual contribution
No restriction on contributions based on parents' (participants') income	No restriction on contributions based on parents' (participants') income	Restrictions based on income: Phase out AGI over $95,000 (single) $190,000 (joint) filer
No age restrictions for beneficiary	Beneficiary must be a minor, under 18 or 21 depending on state	Beneficiary must be under 18
Can be opened by anyone—relative or non-relative—on behalf of a child⁶	Can be opened by anyone-relative or non-relative-on behalf of a minor	Can be opened by anyone — relative or non-relative — on behalf of a child
Invest a lump sum and/or monthly contributions Only cash may be invested in the account	Open with cash or appreciated securities	Contributions can be made to a Coverdell Education Savings Account and 529 plan in the same year
One child per account is named as beneficiary	One child per account is named as beneficiary	One child per account is named as beneficiary

For 529 accounts only, the new beneficiary must have one of the following relationships to the original beneficiary: 1) a son or daughter; 2) stepson or stepdaughter; 3) brother, sister, stepbrother, or stepsister; 4) father or mother or an ancestor of either; 5) stepfather or stepmother; 6) first cousin 7) son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law and 8) son or daughter of a brother or sister. The spouse of a family member (except a first cousin's spouse) is also considered a family member. However, if the new beneficiary is a member of a younger generation than the previous beneficiary, a federal generation-skipping tax may apply. The tax will apply in the year in which the money is distributed from an account.
In order for an accelerated transfer to a 529 Plan (for a given Beneficiary) of $65,000 (or $130,000 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 fails to survive the five-year period, a portion of the transferred amount will be included in the donor's estate for estate tax purposes.
In 2009, for children under age 19 and fulltime students under age 24 whose earned income is less than one-half of their support, the first $950 of earnings is taxfree. Earnings between $950 and $1,900 are taxed at the child's rate; earnings above $1,900 are taxed at the parents' rate.
Periodic investment plans do not guarantee a profit or protect against a loss in a declining market.
College-related expenses refer to qualified higher education expenses as defined in section 529 of the Internal Revenue Code.
Participant must be 18 years or older, must be a U.S. Citizen and must have a Social Security Number or Tax ID.

Portfolios are managed by Strategic Advisers, Inc., a registered investment adviser and Fidelity Investments Company. Pursuant to IRC section 529, a Participant may not have direct or indirect control over the investments in a 529 plan.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, Fidelity Arizona College Savings Plan, and ScholarShare College Savings Plan are offered by the State of New Hampshire, MEFA, the State of Delaware, the Arizona Commission for Postsecondary Education, and the ScholarShare Investment Board, an agency of the State of California, respectively, and managed by Fidelity Investments. If you or the designated beneficiary are not a New Hampshire, Massachusetts, Delaware, Arizona, or California 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.

The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws which may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Fidelity makes no warranties with regard to such information or results obtained by its use. Fidelity disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

*Plan contribution caps are for the 2009 calendar year. The Fidelity-managed 529 plan caps are $300K for the MA plan, $320K for the CA and DE plans, $330K for the NH plan and $335K for the AZ plan.

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

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