Utah Educational Savings Plan - Withdrawing Your Money

How Our Plan Works

Withdrawing Your Money

The Utah Educational Savings Plan (UESP) allows you the freedom to withdraw funds at anytime. However, if the money is used for anything but a qualified higher education expense, you’ll be required to pay federal and state income tax, an additional 10% federal penalty tax on the earnings portion of the distribution and recapture of any Utah state income tax credit or deduction previously claimed—but you are free to make that choice.¹

Account Ownership
By opening a UESP account, you retain control of your money. As the account owner, you may designate a successor account owner (to the extent permissible under applicable state law) to assume all of the rights and obligations of your account, should you die.²

Change of Beneficiary
Section 529 allows you to change the beneficiary as long as the new beneficiary is a member of the family of the preceding beneficiary. Section 529 defines member of the family as: the father or mother, or ancestor of either; a child, or descendent of a child; a stepfather or stepmother; a stepson or stepdaughter; a brother, sister, stepbrother or stepsister, half-brother or half-sister; a brother or sister of the father or mother; brother-in-law, sister-in-law, son-in-law, daughter-in-law, father-in-law, mother-in-law; a son or daughter of a brother or sister; a spouse of the beneficiary or any of the other individuals mentioned above; or a first cousin.

Qualified Higher Education Expenses
Funds in your UESP account can be used for qualified higher education expenses at any eligible educational institution, which generally includes any accredited public or private college, university, or applied technology center anywhere in the country, including some institutions abroad.³ For more information on qualified higher education expenses and eligible educational institutions, visit www.fafsa.ed.gov.

In general, qualified higher education expenses currently include:

tuition, fees, books, supplies, and equipment required for attendance of a designated beneficiary at an eligible educational institution;
room and board for students who are at least half-time; reasonable costs incurred for room and board while attending an eligible educational institution not to exceed the allowance for room and board included in the cost of attendance as determined by the eligible educational institution or, if greater, the actual invoice amount the student residing in housing owned or operated by the eligible educational institution is charged for room and board costs; and
expenses for special needs services in the case of a special needs beneficiary which are incurred in connection with such enrollment or attendance.

1 In cases of death, disability, receipt of a scholarship, or attendance at a military academy, the earnings will be subject to federal and state income tax but you will not have to pay the additional 10% federal penalty. If a Utah state income tax credit or deduction was previously taken, the deducted amount will be recaptured as taxable income for Utah state income tax purposes in the year of the non-qualified withdrawal.

2 The successor account owner will be required to provide UESP with a certified copy of the death certificate of the account owner and other information as UESP requires prior to taking any action regarding the account, including submission of an Account Owner/Agent Change form, form 505.

3 The earnings on any withdrawals used for qualified higher education expenses are exempt from federal taxes and Utah state income tax. Accounts owners should consult their tax adviser with any questions regarding the status of specific expenses as qualified higher education expenses.

© 2009 Utah State Board of Regents, all rights reserved.
The terms Utah Educational Savings Plan and UESP are registered service marks.

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 through December 31, 2013, and $100,000 thereafter. 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, 7, 8, and 9.

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.