Using Your Account

What can I use Utah Educational Savings Plan (UESP) monies for?
Where can I use UESP monies?
When can I take money out of my account?
How long will it take to get a check from your account?
How do I make a qualified disbursement?
What if the beneficiary decides not to attend college?
What if something happens to the beneficiary?
Will I have to pay taxes on disbursements 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 monies?
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 money at any time.

How long will it take to get a check from your account?
Your request will be processed once we receive your Disbursement Request form (form 300). 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 disbursement?
To make a qualified disbursement, complete a Disbursement Request form instructing UESP to send the money to you, to the beneficiary, to an eligible educational institution, or to another 529 plan. The form can be downloaded from the UESP Web site or you may request it by calling us at 800.418.2551. 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” on the disbursement form. You must retain supporting documents showing that your disbursement 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 disbursement, 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 tax does not apply to non-qualified disbursements 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 disbursement, the earnings on which will be subject to federal and Utah state income taxes (and there may be a recapture of any Utah state income tax for credits or deductions associated with the principal being disbursed). However, the earnings will be exempt from the additional 10% federal penalty tax otherwise applicable to non-qualified disbursements.

Will I have to pay taxes on disbursements from my account?
Monies 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 it permanent. Earnings used for non-qualified expenses are subject to federal and Utah state income tax, plus an additional 10% federal penalty tax. There may be a recapture of any Utah state income tax credit or deduction previously claimed. The additional federal penalty tax will not apply to non-qualified disbursements due to the beneficiary's death, disability, scholarship or attendance at a military academy.

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

 

 

© UESP 2008
The terms Utah Educational Savings Plan and UESP are registered trademarks.

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.

Investments are not guaranteed by UESP, the Board of Regents, the UHEAA, the FDIC, or any other state or federal government agency. Your investment may lose value.

Investors who are not Utah taxpayers should determine whether the state in which they or their beneficiary reside or pay taxes offers a 529 plan, and if so, whether that plan offers state tax or other benefits not available through UESP.

 

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

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