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Facts About Utah's 529 Plan

By    |   Wednesday, 20 May 2015 11:49 AM

The 529 college savings plan, or Qualified Tuition Program, is a "tax-advantaged investment plan designed to encourage saving for future higher education expenses of a designated beneficiary," according to CollegeSavings.org. Families can use this tool, making relatively small investments over time, to deal with the rising costs of college and other post-secondary education in a more manageable way.

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Funds withdrawn from the 529 plan are exempt from federal income tax provided that they are used for qualified educational expenses such as tuition, books, supplies, and fees. Many states have similar income tax exemptions in place to encourage this kind of investment.

In Utah, contributions up to $1,900 per beneficiary for a single tax return, and up to $3,800 per beneficiary for a joint tax return, can receive a 5 percent state income tax credit. In 2015 the maximum tax credit allowed is $95 per beneficiary for a single return and $190 per beneficiary for a joint return. These limits increase annually in step with inflation, but no adjustments are made in the event of deflation.

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Utah offers one 529 plan, the Utah Educational Savings Plan, which "provides the highest-quality 529 educational savings plan at the lowest-possible cost and is the plan of choice for Utah residents," according the plan website. The plan received a gold star rating from Morningstar Inc. in 2014 for its low cost and strong investment options.

The Utah Educational Savings Plan is a direct purchase plan through the state, and there are no minimum investment requirements. The maximum total balance per beneficiary is $416,000. Investors can choose from 15 selections covering age-based, blended, capital preservation, equity, and fixed income options.

As part of the 529 plan, the state provides matching grants and limited financial aid benefits. The Fast Forward Matching Program matches up to $400 in contributions per beneficiary per year for qualified Utah residents. The Transition to Adult Living Scholarship helps provide higher education to qualified students from the state's foster care system if they attend a Utah System of Higher Education school.

The Utah Educational Savings Plan Supplemental Award grants up to $400 to students who both qualify for the Regents' Scholarship Award and have had annual contributions of at least $100 in their 529 plan during the ages of 14, 15, 16, or 17, as explained on UESP.org.

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The 529 college savings plan, or Qualified Tuition Program, is a "tax-advantaged investment plan designed to encourage saving for future higher education expenses of a designated beneficiary," according to CollegeSavings.org.
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2015-49-20
Wednesday, 20 May 2015 11:49 AM
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