Question

What are 529 college plans and charitable gift funds? Who chooses the funds in these products?

Answer 1

​​​​Qualified expenses that 529s cover

A tax-advantaged 529 college savings plan can be used to pay for college, but not all expenses qualify. Withdrawals from 529 plans are called distributions, and they must be used toward qualified education expenses – otherwise they will incur federal income tax and an additional 10% penalty. Health insurance and child care, for example, don't qualify. That warning aside, the definition of a qualified expense has steadily expanded over the years to include most typical college costs

Charitable gift funds

When you contribute cash, securities or other assets to a donor-advised fund at a public charity, like Fidelity Charitable, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity.

People who can choose these funds are your donor-advised fund account advisors and any successors or charitable beneficiaries. Your contribution is placed into a donor-advised fund account where it can be invested and grow tax-free. At any time afterward, you can recommend grants from your account to qualified charities.