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What is a 529 plan?
What is the Utah Educational Savings Plan (UESP)?
What are the incentives for saving through UESP?
What if I don't live in Utah?
Does the State of Utah or UESP make any guarantees?
What level of earnings can I expect to receive?
What is a 529 plan?
529 plans are qualified tuition plans established by Section 529 of the Internal Revenue Code of 1986, as amended. Section 529 allows states and state entities to create, maintain and administer the plans, which are tax-advantaged savings vehicles to help encourage individuals to save for the costs of higher education.
What is the Utah Educational Savings Plan (UESP)?
The Utah Educational Savings Plan is a trust fund authorized by the Utah Legislature and designed to comply with Section 529. It is administered by the Utah State Board of Regents acting in its capacity as the Utah Higher Education Assistance Authority. It is the official and only 529 plan sponsored by the State of Utah. It is a "direct-sold" 529 plan, which means that an account can be set up and contributions can be made by dealing directly with UESP. A financial advisor or broker-dealer does not need to be involved.
What are the incentives for saving through UESP?
Your account will grow free from federal and Utah state income taxes while you save. If you use your account for qualified disbursements, earnings are also exempt from federal and Utah state income taxes. Utah taxpayers have additional tax benefits of:
Utah Individuals:
The 2008 individual Utah state tax credit amount is up to $1,650 per beneficiary multiplied by five percent, equaling $82.50 per beneficiary. If filing jointly, the maximum credit is $3,300 in contributions multiplied by five percent, equaling $165 per beneficiary. The credit does not phase out based on the taxpayer’s income. Married couples taking the tax benefits are not required to have separate UESP accounts.
Utah Trusts:
The Utah tax credit for Utah trusts for 2008 is up to $1,650 per beneficiary multiplied by five percent, equaling $82.50 per beneficiary. A joint tax credit is not allowed for institutional accounts such as trusts.
Utah Corporations:
Utah corporations are eligible for a tax deduction equal to $1,650 per beneficiary. A joint tax benefit is not allowed for UESP institutional accounts such as corporations.
To receive the deduction or credit, the account must be established before the beneficiary turns 19 years of age. You also can gift up to $60,000 ($120,000 if filing jointly) at one time without adverse gift tax consequences as long as you elect to prorate the gift over five years. Finally, to meet the diverse needs of the many families we serve, UESP offers a wide range of investment options with low fees on all accounts and special fee waiver for Utah residents.
What if I don't live in Utah?
You don't need to be a Utah resident or taxpayer to open a UESP account - you can invest in any 529 plan and still enjoy the same federal tax benefits. You should, however, check to see if your home state offers a 529 plan and, if so, whether it offers tax or other benefits to its residents or taxpayers that may not be available to investors in UESP. Forty-eight states and the District of Columbia currently offer at least one 529 plan.
Does the State of Utah or UESP make any guarantees?
No, neither the State of Utah nor UESP makes any guarantees concerning the rate of return or preservation of your contributions to UESP accounts. Investments in UESP are not guaranteed by the State of Utah, the UESP, the Board of Regents, the Utah Higher Education Assistance Authority, the FDIC or any other government agency. Account owners assume all the investment risks associated with these kinds of investments, including the risk of loss of principal.
What level of earnings can I expect to receive?
Investments in UESP accounts are subject to market changes and performance of the underlying investments. There are no guarantees that accounts will increase in value, not decrease in value, or achieve any rate of return. You could lose money, including the principal you invest, or not make money by investing in UESP.
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