Utah 529 College Savings Plan
Utah 529 Plan Explained
The Utah Educational Savings Plan (UESP) was authorized by the Utah State Legislature and is designed to comply with Section 529 of the Internal Revenue Code. UESP is administered and managed by the Utah State Board of Regents acting in its capacity as the Utah Higher Education Assistance Authority.
UESP offers college savers a collection of benefits that make saving for college simple and rewarding.
Utah 529 plan Tax Advantages
While your Utah Educational Savings Plan (UESP) assets grow, you owe no federal or Utah state income taxes on the earnings. When your withdrawn funds are used for qualified higher education expenses, you pay no federal or Utah state income taxes on the earnings.
UESP offers 14 investment options. Utah taxpayers/residents who invest in the Utah Public Treasurers’ Investment Fund investment option are not charged annual Administrative Asset or Maintenance Fees. For all investment options, if you are a Utah resident account owner, the annual Administrative Maintenance Fee is waived.
Initial investments or mandatory ongoing contributions are not required—so you can open your account with a zero balance and start saving when it’s right for you.
Flexible Features of the Utah 529 plan
Any U.S. citizen or resident alien who is at least 18 years old and has a valid U.S. Social Security or Taxpayer Identification Number can open a UESP account. This means that parents, grandparents, other relatives, or friends can save through UESP. You can even open an account for yourself or your spouse. There are no age or income limits on who can invest money. Trusts and corporations can also open accounts.
UESP offers a range of options to make it easy for you to contribute to your college savings account.
Choosing your Investment Portfolio
The Utah Educational Savings Plan (UESP) offers 14 investment options, allowing you to choose from distinct investment strategies. Your choices range from your own customized allocation of mutual funds invested in stocks and bonds to an FDIC-insured savings account.
For additional information, please see the details at the Utah UESP Investment Options page.
Utah 529 Plan Fee Structure
UESP does not charge fees for enrollment, withdrawals, investment option changes, or transfers. However, accounts are charged the following:
- Underlying fund operating expense ratios are charged by the mutual fund company for each underlying Vanguard and Dimensional mutual fund. (For more information, see Underlying Fund Operating Expense Ratios.)
- UESP Administrative Asset Fee is an annual fee of 0.14 to 0.20 percent, depending on the selected investment option. This fee is assessed monthly at a rate of 0.0117 to 0.0167 percent (or, in other words, 0.14 to 0.20 percent divided by 12) on an account’s balance on the last business day of each month that both UESP and the New York Stock Exchange are open. The Administrative Asset Fee is waived for Utah residents invested in the Public Treasurers’ Investment Fund investment option.
- UESP Administrative Maintenance Fee is $3 per $1,000 of an account balance and is capped at $15 per year. It is assessed on an account’s balance on the last business day of each month that both UESP and the New York Stock Exchange are open. The Administrative Maintenance Fee is waived for Utah residents. It is also waived for all non-Utah residents who elect to view their quarterly account statements online rather than receive them in the mail.From a monthly perspective, the fee breaks down as follows:
- Account balances under $5,000. If the account balance is less than $5,000 at the end of a month, the fee will be 0.025 percent of the account balance for that month.
- Account balances of $5,000 or more. If an account balance at the end of a month is at least $5,000, the account will be charged a maximum of $1.25 for that month.
Who Manages it?
UESP invests in a combination of Vanguard and Dimensional funds, the Public Treasurers’ Investment Fund, and the FDIC-insured savings account held in trust at Zions First National Bank.
UESP offers investment options that invest in Vanguard mutual funds. As of June 30, 2013, Vanguard manages over $2.2 trillion in U.S. mutual funds and offers more than 160 index and actively managed funds to U.S. investors.» Learn More
Dimensional Funds are available in UESP’s customized investment options. Dimensional manages over $315.4 billion in client assets as of September 30, 2013. » Learn More
Access to Your Utah 529 Plan
Qualified Higher Education Expenses
Funds in your Utah Educational Savings Plan (UESP) account can be used for qualified higher education expenses at any eligible educational institution, which generally includes any accredited public or private college, university, or technical school in the United States or abroad that participates in federal financial aid programs for students. For more information on eligible educational institutions, visit fafsa.ed.gov.
In general, qualified higher education expenses currently include:
- tuition and fees
- books, supplies, and equipment required for enrollment or attendance
- room and board for students who are enrolled at least half-time
- expenses for special-needs services in the case of a special-needs beneficiary that are incurred in connection with such enrollment or attendance
UESP allows you the freedom to withdraw funds anytime. However, if the money is used for anything other than a qualified higher education expense, in most cases the earnings will be subject to federal and state income taxes (including a recapture of any previously claimed Utah state income tax credits or deductions) and a 10% federal penalty tax—but you are free to make that choice.
In cases of a beneficiary’s death, disability, receipt of a scholarship (up to the amount of the scholarship), or attendance at a military academy, the earnings will be subject to federal and state income tax, but you will not have to pay the additional 10% federal penalty. Likewise in such cases, Utah residents are not required to recapture previously claimed Utah state income tax credits or deductions unless such a withdrawal was made before February 26, 2010 (the effective date that Utah state legislation eliminated the recapture requirement).
Account owners should consult their tax adviser with any questions about whether specific expenses are considered qualified higher education expenses.
Eligible Institutions Nationwide
Again, just as a reminder, any money within a Utah 529 plan is not limited to the state of Utah. You can use the funds in any school in any state.