Utah Educational Savings Plan - Using Your Account

FAQs

Using Your Account

What can I use Utah Educational Savings Plan (UESP) monies for?
Where can I use UESP funds?
When can I take money out of my account?
How long will it take to get a check from my account?
How do I make a qualified withdrawal?
What if the beneficiary decides not to attend college?
What if something happens to the beneficiary?
Will I have to pay taxes on withdrawals from my account?
Can I use the account as security for a loan?

What can I use Utah Educational Savings Plan (UESP) monies for?
In general, money in your account may be used to pay for qualified higher education expenses, including tuition, fees, books, supplies and equipment required for enrollment or attendance by a beneficiary at an eligible educational institution. Room and board expenses for beneficiaries who attend school at least half-time are also included, as are expenses for special needs services in the case of a special needs beneficiary.

Where can I use UESP funds?
Funds can be spent at eligible educational institutions, which generally means eligible to participate in federal student aid programs. Most schools nationwide are eligible (as are some schools abroad), including community colleges, public and private four-year colleges and universities, graduate and post-graduate programs, and certain proprietary and vocational schools. You can find a complete list of eligible institutions at www.fafsa.ed.gov.

When can I take money out of my account?
You can withdraw funds at anytime.

How long will it take to get a check from my account?
Your withdrawal will be processed once we receive your request. A withdrawal request can be made online or by using the Withdrawal Request form. The request will usually be processed in about four business days from the time UESP receives it. To ensure timely receipt of your funds, you should submit your request at least two weeks before you need the funds.

How do I make a qualified withdrawal?
You can request a qualified withdrawal online in Account Access or by completing a Withdrawal Request form. Based on your instructions, UESP will send the money to you, to the beneficiary, to an eligible educational institution, or to another 529 plan. Please note that UESP will not process requests for more funds than are currently in an account. Requests for the entire account balance must indicate that the request is for the "entire market value.” You must retain supporting documents showing that your withdrawal was used to pay for qualified higher education expenses.

What if the beneficiary decides not to attend college?
If the beneficiary decides not to attend college, the account owner may change the beneficiary on the account to a member of the beneficiary’s family. Or, the funds may be withdrawn as a non-qualified withdrawal, but the earnings will be subject to federal and Utah state income taxes (including the recapture of previous state tax credits or deductions) and an additional 10% federal penalty tax on the earnings. The additional 10% federal penalty does not apply to non-qualified withdrawals due to the beneficiary's death, disability, receipt of a scholarship, or attendance at a military academy.

What if something happens to the beneficiary?
If the beneficiary dies, becomes disabled, receives a scholarship, or attends a military academy, then the account owner can change the beneficiary on the account or request a non-qualified withdrawal. For such non-qualified withdrawals, the earnings portion will be subject to federal and Utah state income taxes, but will be exempt from the additional 10% federal penalty otherwise applicable to non-qualified withdrawals. Utah residents are no longer required to recapture previously claimed Utah state income tax credits or deductions unless such a withdrawal was made before February 26, 2010.

Will I have to pay taxes on withdrawals from my account?
UESP funds used to pay qualified higher education expenses are free from federal and Utah state income tax. There is no expiration date for tax-free withdrawals for qualified higher education expenses. Congress amended the law (Section 529 of the Internal Revenue Code of 1986) in August 2006, making this benefit permanent. Earnings used for non-qualified expenses are subject to federal and Utah state income tax, plus an additional 10% federal penalty. There may be a recapture of any Utah state income tax credit or deduction previously claimed.

The additional federal penalty will not apply to non-qualified withdrawals due to the beneficiary's death, disability, scholarship, or attendance at a military academy. Utah residents are no longer required to recapture previously claimed Utah state income tax credits or deductions unless such a withdrawal was made before February 26, 2010.

Can I use the account as security for a loan?
No. An account owner may not pledge, assign, or otherwise use the funds in a UESP account as security for a loan. Any pledge of interest in an account will be of no force and effect.

Investors 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 from this Web site.

FDIC Insurance. Except for the underlying investment specified below, investments in UESP are not insured by the Federal Deposit Insurance Corporation (FDIC). FDIC insurance is provided for the FDIC-insured savings account held in trust by UESP at Zions First National Bank (Bank). Funds in the savings account are insured by the FDIC on a pass-through basis to each account owner up to the maximum amount set by federal law—currently $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 UESP’s FDIC-insured savings account plus (2) the value of other accounts held (if any) at the Bank, as determined by the Bank and by FDIC regulations.

No Other Insurance and No Guarantees. Investments in UESP are not 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 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 Bank and FDIC rules and regulations to each account owner, funds in UESP’s FDIC-insured savings account will retain their value, whether in Option 11, or when allocated to portions of Options 2, 3, 7, 8, 9, or 12 (if the FDIC-insured savings account is selected 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.

For more details about how our plan works, download a copy of our Program Description.

Click here to download a pdf.
Click here to request a mailed copy.