Utah Educational Savings Plan

Plan Benefits

Tax Advantages

Tax-Exempt Earnings
The Utah Educational Savings Plan (UESP) offers benefits that help your money grow — and make your account tax-advantaged when April 15th rolls around. Earnings on your account will be exempt from federal income taxes as long as the money is used for qualified higher education expenses.

In addition, if you’re a Utah taxpayer, earnings on your account are also exempt from Utah state taxes if used for qualified higher education expenses.¹ Since these Utah state tax benefits are only available to Utah taxpayers, taxpayers of other states should consider whether their state offers a 529 plan that would provide them with tax or other benefits not available to them through the Utah Educational Savings Plan.

Gift and Estate Planning
Beyond the usual $12,000 annual limit on tax-free gifts, you can make a special election to contribute up to $60,000 per beneficiary in a single year ($120,000 if filing jointly) without paying federal gift tax, as long as you don’t make any additional gifts to that beneficiary over the next five years. Any assets you place in a 529 plan are immediately removed from your taxable estate, yet you retain control.² You can revoke the gift at any time, subject to taxes and penalties. Consult with your estate-planning adviser to learn how this decision will affect your estate.

Making a college investment is a gift that lasts a lifetime.

1 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 $165.00 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.

2 Contributions between $12,000 and $60,000 made in one year can be prorated over a five-year period without incurring gift taxes or reducing your unified estate and gift tax credit. The contribution must be reported on IRS Form 709, United States Gift and Generation-Skipping Transfer Tax Form. If the account owner dies before the end of the five-year period, a prorated portion of the contribution will be included in his or her taxable estate. If you contribute less than the $60,000 maximum, additional contributions can be made without incurring gift taxes, up to a prorated level of $12,000 per year. Gift taxation may result if a contribution exceeds the available annual gift tax exclusion amount remaining for a given beneficiary in the year of contribution.

3 Source: Commissioner’s Office, the Utah State Board of Regents. This hypothetical illustration assumes an initial investment of $10,000 with no additional funds invested, a 5% annual return compounded monthly, and a tax rate of 28% each year on the earnings portion of the account. The graph does not consider any withdrawals made from the account, or consider the impact of any applicable fees. This illustration does not represent the return on any particular investment. Future changes in applicable tax rates or other treatment of investment earnings could negatively impact this illustration. Prospective investors should consider all possible factors including investment time horizon and expected tax brackets before opening an account.

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 Utah State 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.

Tax-Deferred Growth
over 18 years³