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Updated on Wednesday, July 28, 2021
Utah has only one official 529 plan, the my529, which was established in 1996 and originally called the Utah Educational Savings Plan (UESP). There are no minimum contribution requirements, and eligible contributions to accounts can be claimed as a tax credit for state income taxes. The my529 also offers several investment options.
- 529 college savings plan
- How does the Utah 529 work?
- What tax benefits are offered under Utah 529 plans?
- What if I want to pay for an out-of-state school?
How does the Utah my529 plan work?
|Program type||Educational savings plan|
|Fees and expenses||Enrollment fees: None
Fund manager expenses: 0%-0.39%, depending on the options chosen
Administrative asset fees: 0.10%-0.12% for enrollment date and static investment options; 0.15% for customized investment options
The Utah my529 plan allows plan owners to make contributions on behalf of beneficiaries that can grow over time and then be used for qualified education expenses. An account can be opened online at my529.org. Contributions can be made online or by check or payroll contribution. There is also a my529 Gift Program designed for contributions.
The my529 allows for contributions to be made to an account until it reaches an aggregate limit of $510,000. Federal gift tax limits do apply, up to an annual limit of $15,000 for single filers and $30,000 for joint filers. However, a provision for 529 plans allows for contributions beyond these limits — up to $75,000 a year for single filers ($150,000 for joint filers) — since contributions of this size are treated as though they were made in equal installments over the course of five years.
Utah my529 investment options
The Utah 529 plan offers different investment options, based on your strategy. Funds managed by The Vanguard Group, Pacific Investment Management Company (PIMCO) and Dimensional Fund Advisors are included in the choices available. Additionally, some choices include FDIC-insured products held at U.S. Bank and Sallie Mae Bank.
Your contributions are allocated based on your selection. Choices include:
- Enrollment date-based: This option takes into account the year the beneficiary is projected to begin using the funds for qualified education expenses. There are 12 options available. With these portfolios, the assets are automatically rebalanced as your child grows, with the portfolio becoming more conservative as the beneficiary’s enrollment date gets closer.
- Static: With a static approach, the underlying asset allocation doesn’t change as the beneficiary gets older. There are 10 different options that an account owner can choose based on risk tolerance and strategy.
- Customized: It’s also possible to customize your investment strategy based on any of the funds offered by my529. The two options include a customized aged-based investment option and a customized static investment option.
What tax benefits are offered under Utah 529 plans?
|Maximum annual state tax credit (Utah state 529 accounts)||Singles: $102.47 per beneficiary
Joint filers: $204.93 per beneficiary
|Maximum annual state credit (non-Utah state 529 accounts)||Singles: N/A
Joint filers: N/A
|Requirements||Must be a state resident|
Utah offers a state income tax credit to residents that contribute to a my529 plan. A tax credit acts to directly reduce your tax bill, which can mean lower tax liability on Utah state income taxes. The tax credit applies to contributions made to a state 529 plan and only reduces Utah income taxes.
The maximum qualifying contribution for each beneficiary in 2021 is $2,070 for single filers and $4,140 for joint filers. The Utah tax credit amounts to 4.95% of the amount contributed, maxing out at $102.47 for single filers and $204.93 for joint filers. It’s also possible for trusts and flow-through entities to make contributions to a my529 account and claim a credit.
Utah also offers a tax deduction to corporations that make my529 contributions. The maximum tax deduction in 2021 for corporations is $2,070.
What if I want to pay for an out-of-state school?
The Utah my529 plan doesn’t limit use to schools in the state. It’s possible to use the money at any postsecondary school that participates in U.S. federal aid programs — including universities located in other countries. It’s also worth noting that a certain amount of funds can be used to cover qualified costs at elementary and secondary schools (including religious and private schools) all over the country.
Because the tax credit is available to Utah residents when they make contributions to the my529, it doesn’t matter for tax purposes if the student attends an out-of-state school.
Can I rollover my Utah 529 account to another state’s 529 plan?
It’s possible to roll your Utah 529 plan to another state’s plan without tax consequences if certain conditions are met. As long as the plan is in the name of the same beneficiary, it’s possible to do one rollover every 12 months. Additionally, withdrawals must be rolled into a new 529 plan within 60 days in order to avoid penalties.
Note, however, that if you rollover your Utah my529 plan to another state’s 529 plan, you will lose the ability to claim a credit for your contributions on your state income taxes. Additionally, you may have to add back the amount of credits taken previously, reporting them as income on your state taxes.
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