Utah Educational Savings Plan

How Funds Can Be Used

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

What if?

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.

 
 

Important Legal Notice

You should read the Program Description and consider all investment objectives, risks, charges, and expenses before investing. The Program Description is available for download on the web or a hard copy can be mailed to you by requesting it online here.

FDIC Insurance. Except for the underlying investment specified below, investments in UESP are not insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance, up to applicable limits, is provided for the FDIC-insured accounts held in trust by UESP at Sallie Mae Bank and U.S. Bank National Association (U.S. Bank) (collectively Banks). Contributions to and earnings on the FDIC-insured accounts are allocated between the Banks according to the following percentages: Sallie Mae Bank (90 percent) and U.S. Bank (10 percent). Money in the FDIC-insured accounts is insured by the FDIC on a pass-through basis to each account owner at each Bank up to the maximum amount set by federal law, which is $250,000. The amount of FDIC insurance provided to an account owner is based on the total of (1) the value of an account owner’s investment in the FDIC-insured account at each Bank plus (2) the value of other accounts held (if any) at each Bank, as determined by the Banks and by FDIC regulations.

No Other Insurance and No Guarantees. Investments in UESP are neither insured nor guaranteed by the State of Utah, UESP, the Utah State Board of Regents, the Utah Higher Education Assistance Authority, other state agencies, federal government agencies (except to the extent noted above regarding FDIC insurance), or any employees or directors of any such entities. Units in UESP have not been registered with the United States Securities and Exchange Commission or with any state securities commission.

Account Value. The value of your UESP account may vary depending on market conditions and the performance of the UESP investment option you select. It could be more or less than the amount you contribute; in short, your investment could lose value. However, subject to the application of the rules and regulations of the Banks and the FDIC to each account owner, money in the FDIC-insured accounts will retain its value, whether in the FDIC-Insured investment option or when allocated to portions of another investment option that have the FDIC-insured accounts included as an underlying investment.

Non-Utah Taxpayers and Residents. You should determine whether the state in which you or your beneficiary pay taxes or live offers a 529 plan that provides state tax or other benefits not otherwise available to you by investing in UESP. You should consider such state tax treatment and benefits, if any, before investing in UESP.