For Utah Residents

Utah State Income Tax Credit

Aside from being financially prepared for college, many Utah taxpayers save with UESP because of the Utah state income tax credit available to them.

For the 2010 tax year, account owners, who are Utah taxpayers/residents, may be able to claim a credit or deduction for contributions to their UESP accounts. Individual tax filers and Utah-based trusts can claim up to $85.50 in tax credits per beneficiary. Those individuals who file jointly can claim up to $171 in tax credits per beneficiary. Even UESP accounts owned by Utah-based corporations can benefit from a $1,710 tax deduction per beneficiary. You can contribute more or less than this amount, but this is the maximum contribution that qualifies for the Utah tax benefit.

The more beneficiaries, the more you can save. Rollovers from other 529 plans to UESP are also eligible for the tax savings. For example:

State Tax Benefits Table

State Income Tax Credit Eligibility
Keep in mind that to be eligible for the tax savings, the account must have been established before the beneficiary designated on the UESP account was age 19. Once the account is eligible for the tax savings, you can continue to claim the tax savings each year you make contributions—for the life of the account.

Utah account owners can even claim tax benefits when others contribute to their accounts. So it pays to encourage family and friends to make contributions to your account for birthdays, holidays, and other occasions.

And as long as the account owner is a Utah taxpayer/resident, the account owner can claim the tax benefits no matter where the beneficiary lives—in another state or even another country.

Tax Benefits for Utah’s Part-Year Residents
An apportioned amount of the UESP state tax credit can be claimed by part-year Utah taxpayers/residents—account owners who have moved in to or out of Utah within the tax year or those who live in Utah only seasonally. See the Program Description for more information.

Contributing Your Utah State Income Tax Refund to UESP
A Utah taxpayer/resident can select the Utah Educational Savings Plan option (line 45) on the 2009 Utah state individual income tax return and have their entire Utah state income tax refund contributed to their UESP account(s). The tax credit is available for the tax year in which the contribution is made.

If you already have a UESP account(s), the refund transfer is easy, simply check the box. If you haven't yet opened a UESP account you can also check the box, and UESP will mail you an enrollment kit. Guidelines for taxpayer refunds directed to UESP are as follows:

The refund will be allocated equally among all UESP accounts if you have more than one UESP account.
The entire refund will be sent to UESP even if you file a joint return, and the refund will be divided equally between all UESP accounts for both taxpayers.
The Utah tax refund will not be deposited in your UESP account(s) until UESP receives the funds.

Recapture of Utah Income Tax Credit or Deduction
A recapture of any Utah state income tax credit or deduction is required when there is

a non-qualified withdrawal;
a change in beneficiary from one who was younger than age 19 when designated on the account to a new beneficiary who is age 19 or older;
a fund transfer from an account with a beneficiary who was younger than age 19 when designated on the account to the account of a beneficiary who is age 19 or older when his or her account was opened; or
rollover to another 529 plan.

The addition to Utah taxable income must be added in the year of the non-qualified withdrawal, change, transfer, or rollover occurred.

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.

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