Fidelity 529 CC & 529 Plan

- Do you have to open the 529 account with Fidelity? What are the pros and cons for either?
Yes

- Is the account open in your child's name, your name, or grandparents name?
Your name with the child named as beneficiary.

- Do you have multiple accounts setup for maxmium savings (past $1500 annual cap)?
The $1,500 limit is the maximum reward per card (requires $30,000 in spending), not the maximum per 529 account.

I believe I recall that more than one person can get a 529 card linked to the same 529 account. What I don't recall is whether there's a $1500 spread among all the cards linked to the account or it's per card.

danimal67 said: I believe I recall that more than one person can get a 529 card linked to the same 529 account. What I don't recall is whether there's a $1500 spread among all the cards linked to the account or it's per card.

The limit is per card, not per 529 account (thanks for the correcting my math didyousearch, $75K in spending per card to hit the $1500 reward level).

There are limits on how much can be contributed to a 529 account but that's orders of magnitude higher than $1500 (and includes contributions from all sources, not just the 529 credit card reward).

GreedyBumps said: Has anyone with a different MBNA card try to open this one? In my prior experience MBNA would close the previous card. I have Merrill Lynch right now with MBNA and don't want to lose it. Any suggestions on how to work with MBNA to keep both cards open?

One can convert the 1.5% fido card to this one, but it doe not apply to any other MBNA cards. That is, it has to be a new application. Hope this helps.

My only other CC was an MBNA when I opened my 529 card. They kept it open, although they lowered the available credit. I didn't have to do anything special. My limit was ~25k on the one, and the split between the two after was the same when totaled I believe.

GreedyBumps said: Has anyone with a different MBNA card try to open this one? In my prior experience MBNA would close the previous card. I have Merrill Lynch right now with MBNA and don't want to lose it. Any suggestions on how to work with MBNA to keep both cards open?

hey i just had a question.. so if you start the 529 plan and you do it for lets say 30 years and you never have a kid that goes to college.. what happens to that money?

76hhma said: One can convert the 1.5% fido card to this one, but it doe not apply to any other MBNA cards. That is, it has to be a new application. Hope this helps.

Wrong. I converted my wife's old hg1 worldpoints card to the fidelity 2% card when the 10% promo ended. They even bumped the credit line.

I have three fidelity cards all paying into the same 529 account. Mine, my wife's, and my parents. The only limit seems to be the number of cards.

longwood8 said: 76hhma said: One can convert the 1.5% fido card to this one, but it doe not apply to any other MBNA cards. That is, it has to be a new application. Hope this helps.

Wrong. I converted my wife's old hg1 worldpoints card to the fidelity 2% card when the 10% promo ended. They even bumped the credit line.

I have three fidelity cards all paying into the same 529 account. Mine, my wife's, and my parents. The only limit seems to be the number of cards.

Yeah, I used to be able to do that (conversion). But I recently attempted to convert other MBNA cards (HGW1 cards) to 529 cards, no go without new applications. Maybe they changed their policy since you converted, but this is definitely a YMMV case.

ProfessorEd said: Fidelity 529 card is good deal.

To avoid fees on Fidelity 529 plan you can set up an automatic withdrawal from bank of $50. This has the usual risk of accidentally over drawing account and creating problems that way, but is probably worthwhile.

On 529 plans, if your children do not go to college, you can change the beneficiary to their children (or a sibling of theirs) or you can take the money yourself and pay a moderate tax penality.

As pointed out if you use other cards for groceries, gas, drugstores (which give 5%) many families will not hit the $75,000 in spending on the Fidelity card that loses the 2% rebate.

MBNA does let you have several cards (and move credit limits) so having one MBNA card does not prevent getting this one.

Good point about the auto contribution, that's what I do with my account to avoid extra fees.

You aren't limited to changing the beneficiary to your children's siblings or their children without penalty. The new beneficiary must be a "family member" of the current beneficiary with "family member" defined as:

Father or mother, or an ancestor of either
Stepfather or stepmother
Brother or sister of the father or mother
Brother, sister, stepbrother, or stepsister
Son or daughter, or descendant of either father-in-law, or mother-in-law
Stepson or stepdaughter
Son or daughter of a brother or sister
Spouse of the designated beneficiary or any of the above individuals
Brother-in-law, sister-in-law, son-in-law, daughter-in-law,
First cousins

There are possible tax implications involved with changing the beneficary to a younger generation and I don't know that tax law has clarified end runs around the "family member" rule which involve multiple changes of beneficiary (from your child to their cousin, to the cousin's cousin, ...).

For some reading about the potential loop-holes (abuses?) involving 529 plans read the following, I would encourage the use of a compentent attorney familiar with tax law if you are considering engaging in high dollar 529 strategies.

529 Info

It was slow, for me about two weeks.

rightster said: Which fidelity 529 plan is better?this is an excellent question, i havent researched them and hope someone with more experience with the Fidelity 529 offerings will comment

I am in the New Hampshire plan. Made the decision a number of years ago based on investment alternatives, funds and expense rations.

To me, the decision was between the NH Fidelity plan and the Utah Vanguard plan. (In state plan offers little incentive - besides is a real lousy plan)

I have this card and am using the Unique plan - I've had this card for years, I think the Unique was the only nationwide option when I signed up.

All the expense ratios and funds are pretty close - not identical, but close.

Unique NH plan has a $30 annual fee, all others have a $20 annual fee. The fee, as mentioned, can be waived with a $50 monthly or $150 quarterly automatic deposit.

What I find interesting about this is that is it up to each 529 owner to do the taxes correctly. All you need to get a distribution is send in a form and they send you a check. Unless you get audited, it seems nobody will bother verifying you actually had college expenses. I guess thse 529s are still pretty new.

update: it looks like now it is $20 annual fee for all of them, although some of the paperwork still says $30

as i recall, the management fee is an additional .30% annual expense ratio for all the states, although it is broken up differently based on each state's rules. no way around that...

If I read this correctly, it appears one only has to pay the 10% penalty and income tax on earnings(capital gains?) vs the principal in the account.

Question - how does one know the difference?. If you withdraw 25-50%, how much can be said to be earnings?. Do they determine that by percentage of the total?. so if you have $10k principal and the 529 plan made 10% for $11k, and you withdrew $1.1k, you'd be paying the penalty and tax on $100?.


linky

"Distributions from the Fidelity Arizona Plan can be taken at any time for any reason; however, if the funds are not used for qualified higher education costs, any earnings will be subject to income tax at the Distributee's rate and a 10% federal penalty."

I use the AZ plan because I'm in AZ but I believe this applies to all the plans.

As Jpsmoney said - "What I find interesting about this is that is it up to each 529 owner to do the taxes correctly. All you need to get a distribution is send in a form and they send you a check. Unless you get audited, it seems nobody will bother verifying you actually had college expenses. I guess thse 529s are still pretty new."

I would like to make sure that I do indeed do it correctly and dont end up disemboweled by the IRS .

genome4hire said: Anyone know the secret to card conversions with MBNA?

They won't let me convert any of my MBNA card products (MBNA AMEX, Schwab Visa, Quantum Visa) into a Fidelity card.

I know FW people have done this before - whats the trick? Just keep calling back to get the right CSR?I personally didn't bother with converting a card. Instead, I had both a Schwab and Fidelity card and called to combine the credit limits and cancel the Schwab card. It took all of three minutes on the phone. I personally have to say that the CSRs on the Fidelity card are phenomenal. There's no automated phone system or anything. You call, and they pick up after a few seconds of on hold music.

genome4hire said: Anyone know the secret to card conversions with MBNA ? They won't let me convert any of my MBNA card products (MBNA AMEX, Schwab Visa, Quantum Visa) into a Fidelity card. I know FW people have done this before - whats the trick ?The trick is that the MBNA CSR is NOT converting one card to another card, but THEY call it that. They first apply for the new CC type, generating a Hard pull with a credit reporting agency. Then they transfer the CL from the old CC to the new CC before closing the old CC.

Those who have succesfully "converted" can verify the above on their credit reports.

StarHusker said: Can someone confirm the following:

it seems to me that
(1) if you set up 50$ automatic contribution per month, you'll get away with any fee associated with Fidelity.
(2) contributions can be withdrawn at anytime without penalty. So, you can get out your 50$ per month contribution and MBNA 2% cc bonus at anytime.

If those two points are true, then this card is very appealing to me. The only concern left is that how long MBNA will keep this program due to the merge with BofA.

(1) I am doing the $50 contribution per month, it is true.
(2) I think that it is true, too. But I have not tried it yet.

I hope that this 529 card offer will last long. If not, I have to use my BofA Power Rewards card instead.

StarHusker said: Can someone confirm the following:

it seems to me that
(1) if you set up 50$ automatic contribution per month, you'll get away with any fee associated with Fidelity.
(2) contributions can be withdrawn at anytime for any purpose without penalty. So, you can get out your 50$ per month contribution and MBNA 2% cc bonus at anytime.

If those two points are true, then this card is very appealing to me. The only concern left is that how long MBNA will keep this program due to the merge with BofA.

(1) Definitely true
(2) There is a 10% penalty on any earnings if withdrawals are not spent on qualified education expenses. However if you withdraw your MBNA 2% cc rebate right after it is put in the 529 account each quarter along with $150 that you put in during the quarter, your earnings and thus the resultant tax & penalty are minimal. The Form 1099R that you receive each year from Fidelity will show the earnings for the year.