School is back in session and Fidelity Investments [see profile] is looking to make saving for college a little easier for parents nationwide.

The Boston Behemoth said yesterday it will offer a bank account option in five college savings plans it manages. Fidelity also will offer the option in its other tax-advantaged college savings products in New Hampshire, California, Delaware, and Arizona, that it markets directly to customers.

Fidelity, which is offering the bank account through a partnership with Wells Fargo, said it initially plans to offer 0.19 percent interest on the bank account, and it is offering 0.01 percent interest on its money market fund. Both rates are expected to improve when interest rates rise.

Joe Ciccariello, vice president of Fidelity’s college planning group, said Fidelity moved to offer the product because nearly half of all parents are saving money in traditional bank accounts, which do not have the tax benefits of a 529 account.

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Fidelity® Adds New Bank Deposit Portfolio Across Its Direct-Sold 529 College Savings Plans 09/28/10 New Investment Option Offers Families Saving for College a Tax-Advantaged, FDIC-Insured Alternative

BOSTON – Fidelity Investments®, a leading provider of 529 college savings plans, today announced the addition of a new Bank Deposit Portfolio across its five direct-sold 529 college savings plans.

The new Bank Deposit Portfolio is available to investors today through each of the five direct-sold 529 plans Fidelity manages, including New Hampshire’s UNIQUE College Investing Plan, California’s ScholarShare College Savings Plan, Massachusetts’ U.Fund® College Investing Plan, the Delaware College Investment Plan and the Fidelity Arizona College Savings Plan.

The Bank Deposit Portfolio is comprised exclusively of a deposit into an FDIC-insured , interest-bearing, Negotiable Order of Withdrawal (NOW) account and is designed to preserve principal. The rate of return provided by the Bank Deposit Portfolio is indexed to the federal funds effective rate.

“With more families saving for college, we see a wider range of investment preferences,” said Joe Ciccariello, vice president, Fidelity Investments, College Planning. “The addition of the Bank Deposit Portfolio offers an additional investment option that may help meet the needs of a larger group of investors.”

In addition to the new Bank Deposit Portfolio, Fidelity also offers other conservative options for 529 investors including the Conservative Portfolio and the Index Conservative Portfolio, both diversified portfolios comprised of money market, short term and other fixed-income investments. Fidelity also offers the Money Market Portfolio that invests primarily in short-term debt obligations such as U.S. Treasury bills and certificates of deposit.

“While the vast majority of our participants continue to look to Fidelity to help guide their investments through our popular age-based portfolios, some investors are looking for a broader range of conservative investment options with FDIC insurance,” said Ciccariello. “The new Bank Deposit Portfolio expands Fidelity’s full line of investment options and provides additional choices for families who want to invest in a Fidelity-managed 529 plan.”

For families looking for assistance with college savings options, Fidelity provides phone access to dedicated college representatives at 800-544-1914. Fidelity also offers access to online tools on its College Planning web page, which provides tuition and expense information for thousands of private and public colleges and universities. The online tools allow investors to calculate how much they need to save and potential savings growth in a tax-advantaged 529 account.

About Fidelity Investments Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of nearly $3.2 trillion, including managed assets of more than $1.4 trillion, as of August 31, 2010. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com. 

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