New Hampshire 529 Plan Basics

While we are providing general information about the state’s 529 college savings plan, please consult the Plan Description and Participation Agreement for more detailed information and facts about the plan.

A 529 plan is a savings plan that encourages education savings for qualified higher education expenses: college, vocational, or other post-secondary learning. 529 plan funds can also go to private high school or K-12 tuition at a qualified tuition program.

Unlike a traditional savings account or bank account, your money grows tax-deferred in a 529 account and qualified distributions are federal tax and state tax free.

Different states have different state plans with different investment options and different tax benefits. They will also have different minimum contribution (and subsequent contribution) requirements and plan fees. You are not required to open a 529 plan in your home state. You can open a 529 plan in any state that accepts out-of-state enrollments. Additionally, 529 plan accounts can be linked to the Upromise rewards service. Earn an extra $25 bonus when you connect a 529 account to your Upromise profile.

New Hampshire has two different 529 plans: UNIQUE College Investing Plan and Fidelity Advisor 529 plan.

The UNIQUE College Investing Plan is a direct-sold plan that does not require residency and has 0.05% – 1.04% fees. This is a Fidelity-managed 529 plan that follows the same approach as other Fidelity 529 plans in Arizona, Delaware and Massachusetts. It features three age-based options; one using Fidelity Series actively managed funds; one using Fidelity Series index funds; and a third using a combination of the two.The plan also offers 11 static options, and one option that invests in an interest-bearing deposit account.

The Fidelity Advisor 529 plan is an advisor sold plan with 0.82% – 2.24% advisor management fees and does not require residency. This advisor sold plan utilizes Fidelity Series funds in age-based and static portfolio options, as well as a Fidelity Advisor fund in its individual fund portfolio options.

Both plans have a maximum contribution limit of $522,000. You can make contributions to all New Hampshire 529 plans, for the same beneficiary, until all account balances reach $522,000.

For more information about saving for college in New Hampshire, visit the New Hampshire State Treasurer’s website or at fidelity.com.

What are some New Hampshire 529 plan benefits and tax advantages?

Funds you invest in a 529 plan grow tax-deferred. And funds that the student eventually withdraws from the plan towards qualified educational costs are free from federal taxes.

A common misconception is that these 529 plan assets will disqualify your child from financial aid. On the contrary, 529 plan funds are treated more favorably in the financial aid formula than other savings in your child’s name through a custodial account such as an UTMA/UGMA. This is because assets in a child’s 529 plan belong to the parent not child, and FAFSA (Free Application for Federal Student Aid) gives preferential tax treatment to assets belonging to a student’s parent versus the student.

If your child is an Einstein or football star, and manages to score a free ride to school, you can still repurpose those funds. You can take out an amount equal to the scholarship fund amount from the 529 plan without incurring the 10% penalty tax fee you’d normally have to pay on funds not going to qualified education costs. (You would have to pay regular ordinary income taxes on earnings, but there would be no penalty. Alternatively, you can leave the funds in a 529 plan to be used at a later date by this beneficiary or a direct relative of the original beneficiary.)

And for many, a 529 plan can be used to transfer wealth. Contributing to a 529 plan lets grandparents or other contributors reduce the size of their taxable estate while helping them fund a grandchild’s or family member’s education. It’s even possible to make five years worth of contributions in a single year, up to $75,000 (or $150,000 for married couples) and still get the gift tax exclusion.

Is a 529 plan tax deductible in the state of New Hampshire?

No, New Hampshire does not offer state tax deductions for contributions to 529 plans.

What happens to a New Hampshire 529 Plan if not used?

There is no time in which the funds within a New Hampshire 529 plan need to be withdrawn. Unused funds can remain in the account and continue to grow tax-deferred.The account owner may also choose to change the beneficiary, without penalty, to another individual with a social security number who is a member of the original beneficiary’s family and a United States citizen. This is not limited to immediate family members; funds can be transferred to cousins, nieces, nephews, and other close relatives. The account owner can close the account if not used, but funds in the account will be subject to federal and state income tax as well as a 10% penalty on the account earnings.

And as outlined earlier in this article, 529 plans allow the account owner to withdraw the amount a beneficiary receives in scholarships without incurring the 10% penalty.

Can a New Hampshire 529 Plan lose money?

Yes, a 529 plan is an investment plan with different types of investment options. The investment options offer different levels of market risk.

Speak with a qualified financial advisor about your financial goals and different investment portfolio options.

Do I need a New Hampshire 529 Plan for every child?

You don’t need a New Hampshire 529 plan for each child but you may find it easier to administer if you do. You can only have one named beneficiary on a New Hampshire 529 plan. The risk and mix of equities to fixed income of certain investment options is determined by the age of the beneficiary. For this reason, you may want to have a different 529 plan for each child.

You may be interested to know that multiple people can open accounts for the same beneficiary.

Can a New Hampshire 529 plan be used to pay off student loans, apprenticeships, and K-12 private schools?

New Hampshire 529 plans can be used to pay tuition at K-12 private schools and to pay student loans up to $10,000 annually. 529 plans can also be used to pay for registered apprenticeship programs.

How do financial aid and scholarships affect a New Hampshire 529 plan?

A 529 plan can affect financial aid, but the impact is dependent on the account owner and their tax situation, not the beneficiary.

If the account is held by the parent or guardian of the student, funds within are considered parental assets. The Expected Family Contribution (EFC) calculation for parent assets is a maximum of only 5.64% versus 20% for the students assets.However, if the 529 plan is held by a grandparent or extended family member, while the assets are not taken into account for the FAFSA EFC, distributions from these accounts qualify as student income, which is assessed at 50%.

529 accounts do not affect merit-based scholarships. Other scholarships may depend based on the school.

Start saving towards a New Hampshire 529 plan

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529 Plan Basics by State

Check out these College Savings: 529 Plan Basics by State

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