Fidelity Reduces 529 Plan Costs
I am using Fidelity 529 plan to save for our older daughter’s future education. The investing started nearly four years ago and it’s still going every month now. When I read an article on Morningstar.com yesterday that Fidelity is reducing costs of its direct-sold 529 plans, I was quite happy to hear the news because, as a long-term investment plan that invests mostly in index funds, the cost of the plan is always high on the list of things to consider when selecting a plan. According to the Morningstar article, Fidelity
is slashing fees the most on its direct-sold 529 index portfolios in New Hampshire, Massachusetts, California, Arizona, and Delaware. Fidelity is reducing its program management fee to 15 basis points (0.15%), down from 30 basis points, and the total annual asset-based fees range from 25 – 35 basis points (down from an already reasonable 50 basis points).
The plan I am using is the New Hampshire UNIQUE plan 2024. I haven’t received any email or letter from Fidelity yet, so I don’t know details of exactly what has changed to my plan, but it looks like the total annual asset-based fee is now at 0.39% for the 2024 plan.
This isn’t the first time that Fidelity cut costs of the 529 plans it manages. In 2006, the UNIQUE plan eliminated the annual account fee. So the reduction in the fund’s total annual fee is definitely a welcome news.
BTW, in addition to my regular monthly purchase to the plan, I also make additional contributions by using the Fidelity 529 College Rewards Card which offers 2% cash back for every purchase. The credit card is linked to the plan, so every time the accumulated cash back reaches $50, the money is automatically invested in the 529 plan.
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