School Choice Funding: Options on the Federal Level

Families of prospective World Academy students looking to finance their child’s education may be able to take advantage of new Federal funding options, including the expanded 529 savings plan.

Expanded 529 Savings Plans and Funding School Choice

Due to recent changes to federal policy as a result of the new tax law in 2018, there is added possibility that families in the Granite State and across the country could finance their child’s elementary, middle, and high school education through tax-free 529 savings plans.

529 savings plans are specifically created to allow families to grow savings for tuition tax-free and to withdraw that money to pay for tuition exempt from income tax, as well as New Hampshire interest and dividends taxes. Funds withdrawn from a 529 plan are also exempt from federal capital gains taxes.

The updated federal legislation allows families direct up to $10,000 per year in 529 savings plan assets to be used for education expenses for grades K–12, in addition to college and post-graduate study. The state of New Hampshire, however, has not yet officially announced where it stands on families using 529 funds to finance K-12 education and families are advised that, while legally allowed to withdraw funds, there is a possibility that the state may announce that 529 plans in New Hampshire are still limited to funding higher education only.

The state of New Hampshire offers two versions of the 529 plan, each contractually administered by Fidelity Investments with fiduciary oversight provided by the College Tuition Savings Plan Advisory Commission: the Fidelity Advisor 529 plan, and the UNIQUE College Investing Plan.

Fidelity Advisor 529 Plan

  • Available only through non-Fidelity financial advisors;
  • Minimum initial contribution as low as $50 per month with a systematic investment plan, or $1,000 without a systematic investment plan;
  • Account fee of $20 is waived if the participant signs up for a systematic investment plan or if the account balance is equal or greater than $25,000.

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UNIQUE College Investing Plan

  • Offered directly to Fidelity retail investors and open to all U.S. residents – parents, grandparents, family, and friends;
  • Minimum initial contribution $50, or $15/month ($45/quarter) with automatic investments;
  • No annual account maintenance fees and no income restrictions.

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Additionally, both of these plans offer a High Contribution Limit of $500,000 per beneficiary, and allow contributions and earnings to be reallocated twice each calendar year. However, investment options and investment fees may differ depending on which plan you choose and how your investment strategy is set up. For more information, see official information from the New Hampshire State Treasury.

Families in the Granite State are by no means limited to choose only from the two plans sponsored by the state of New Hampshire, and are free to choose or carry over plans from other states or providers to finance their child’s education in New Hampshire.

Those families looking to fund their child’s education through a 529 plan offered by New Hampshire or elsewhere may want to consider consulting a financial advisor or professional education financial planner to ensure they are fully knowledgeable of the financial benefits and tradeoffs associated with 529 plans, and which investment strategy may work best for them.

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