What is a my529 college savings plan?
The Utah Educational Savings Plan (UESP), also known as my529, is a 27-year old nonprofit 529 educational savings plan. The state of Utah started this program in 1996 as its official and only 529 plan. It helps families save money for future qualified higher education expenses while offering valuable tax advantages.
My529 is a direct-sold plan, meaning, account owners can open and manage their accounts without a financial advisor. They keep full control of their accounts—not the beneficiary. Any U.S. resident who is at least 18 years old with a valid Social Security or Taxpayer Identification Number can start an account. Trusts, partnerships, and corporations can also own accounts. If a my529 account has been owned for at least eight consecutive years, Utah residents may qualify for in-state tuition at Utah public colleges and universities.
The plan now manages over $25 billion in assets with more than 560,000 accounts. The Utah Education Savings Board serves as the trustee for the my529 plan, providing oversight and governance.
Account holders can choose from three main investment paths:
- Target enrollment date options (12 portfolios) – These shift to safer investments as your child gets closer to college
- Static options (10 portfolios) – Keep the same mix of investments, whatever the beneficiary’s age
- Customized options (two types) – Lets you create your own investment strategy
The investments include funds from Vanguard, Dimensional Fund Advisors, PIMCO, and FDIC-insured accounts at Sallie Mae Bank and U.S. Bank. Account owners can switch their investment choices twice every calendar year.
You can use my529 funds at any eligible school in the U.S. or abroad that takes part in federal student aid programs. The money covers tuition, required fees, books, supplies, computers, internet access, and room and board for students enrolled at least half-time. The funds also work for K-12 tuition at public, private, or religious schools (up to $10,000 each year).
The tax benefits are substantial. Your earnings grow free from federal and Utah state income taxes. Withdrawals stay tax-free when you spend them on qualified education expenses. Utah taxpayers who own accounts can claim a state income tax credit on their contributions up to certain limits. This applies if the beneficiary was under 19 when added to the account. For 2025, single taxpayers can get up to $113.30 per beneficiary in credit, while joint filers can receive up to $226.59.
Families can start saving with my529 without paying enrollment fees or worrying about minimum contributions or balances. This makes it easy for families to begin saving for education expenses, whatever their financial situation. You can get started by completing a quick online enrollment form. Before enrolling, prospective account owners should carefully read the program description and any important legal notice in their entirety to understand all features, risks, and legal considerations.
What are the my529 investment options?
My529 gives you three different investment options that work with your savings goals and how much risk you want to take. Each option comes with its own strategy and mix of investments. When choosing an investment option, it’s important to consider your investment objectives and understand the risks involved.
The target enrollment date investment option has 12 portfolios. These range from aggressive to conservative investments. Your choice depends on when you plan to start using the funds for education costs. The portfolios adjust every quarter. They move to safer investments as you get closer to your target year. A new target enrollment date portfolio shows up every two years. You can pick any portfolio you like, whatever the year your beneficiary plans to enroll.
Static investment options keep the same mix of assets, no matter how old your beneficiary is. My529 has 10 static options. You’ll find everything from Total US Stock Market portfolios to safer choices like FDIC-insured and Stable Value options. These stay the same unless you want to make a change.
My529 has two customized options that give you more control:
- Customized age-based: You can create your own investment mix across 10 age brackets (0-3, 4-6, 7-9, 10-12, 13-14, 15, 16, 17, 18, 19+). The investments automatically adjust when your beneficiary hits the next age group.
- Customized static: You can build your own investment mix using available funds without age-based changes.
The purpose of a my529 plan is to help families save for higher education by investing in a tax-advantaged account to grow savings over time.
Top financial companies manage the investments in my529 accounts. These include Vanguard Group, Dimensional Fund Advisors, Pacific Investment Management Company (PIMCO), and FDIC-insured accounts held in trust by Sallie Mae Bank and U.S. Bank. My529 puts everyone’s contributions together to invest in these funds.
Keep in mind that you don’t own direct shares of these investments. You own my529 units in your chosen investment options. Each unit’s daily net asset value (NAV) comes from the total value of the underlying investments, including income and expenses. Portfolio performance can vary depending on market conditions.
Administrative Asset Fees run from 0.090% to 0.110% per year ($0.90 to $1.10 per $1,000 invested). The Underlying Fund Expenses vary. Most Vanguard funds charge between 0.010% and 0.070%. Dimensional funds typically cost between 0.130% and 0.310%.
IRS rules let you change your investment option twice each calendar year.
How do my529 fees work?
My529’s fee structure has two main components that affect your overall investment cost. These fees combine to create the total annual asset-based fee charged to account owners. My529 does not charge any sales charges, so investors do not pay commissions when making contributions or withdrawals. Fee updates and detailed information are posted regularly for account holders to ensure transparency.
Administrative asset fee
My529 charges an administrative asset fee to cover operating expenses. The fee adds up daily and shows up in the net asset value of each investment option. As of July 2023, target enrollment date and static investment options charge 0.100% ($1.00 per $1,000 invested yearly). Customized portfolios cost a bit more at 0.130% ($1.30 per $1,000 invested yearly).
Your total annual investment cost combines the administrative asset fee with your chosen investment option’s underlying fund expense. A simple calculation shows that with an underlying fund expense of 0.024% plus the administrative asset fee of 0.100%, you’d pay a total annual asset-based fee of 0.124%.
Underlying fund expenses
Investment managers Vanguard, Dimensional, and PIMCO charge underlying fund expenses for each fund in the investment options. People often call these operating expense ratios or fund management fees .
Each fund charges different expenses:
- Vanguard funds cost between 0.010% and 0.070%
- Dimensional funds run from 0.130% to 0.310%
- PIMCO interest income fund costs 0.109%
- FDIC-insured accounts cost nothing for underlying investments
Investment managers take these expenses directly from their funds’ NAV. These costs don’t show up on my529 quarterly statements. Your my529 account’s performance and market values already reflect these expenses.
Total asset-based fees vary by investment option:
- Target enrollment date options: 0.124% to 0.135%
- Static investment options: 0.100% to 0.210%
- Customized investment options: 0.130% to 0.453%
Customized investment options reach their maximum underlying fund expense of 0.323% when an account puts 25% (the maximum allowed) into each of my529’s most expensive underlying funds. Account owners can calculate their specific costs using my529’s customized age-based and customized static allocation and fee calculators.
What are the tax benefits of a my529 plan?
Families choose my529 plans for education savings mainly because of tax advantages. Account owners get financial benefits at both federal and state levels. Utah offers tax credits for contributions to my529, providing direct savings on state taxes. Qualified distributions from my529 may be exempt from state taxes, increasing the plan’s financial appeal. Additionally, under certain legal conditions, my529 accounts may be exempt from claims by creditors, offering further statutory protection for account holders.
Federal tax advantages
My529 accounts grow tax-deferred at the federal level, unlike regular savings accounts. Investment gains build up without yearly taxes. The withdrawals stay tax-free when you use them for qualified education expenses.
Qualified expenses cover tuition, fees, books, and room and board at eligible educational institutions. My529 funds can now be used tax-free for:
- K-12 tuition expenses (up to $10,000 annually)
- Student loan payments (up to $10,000 per beneficiary)
- Apprenticeship program costs including fees, books, supplies, and equipment
- Computer technology, equipment, and internet access for the beneficiary and family during enrollment periods
The earnings portion faces federal income tax plus a 10% federal penalty if used for non-qualified expenses. This setup is meant to encourage spending on education.
Utah state tax credit
Utah taxpayers get major state tax benefits on top of federal advantages. Utah offers a tax credit that directly cuts state income tax owed, while many other states only provide deductions.
Utah taxpayers can claim a 4.55% state income tax credit on contributions up to certain limits in 2025. Single filers’ contributions go up to $2,490 per beneficiary with a maximum credit of $113.30. Joint filers can put in up to $4,980 per beneficiary and receive up to $226.59 in credit.
The beneficiary must be under 19 when added to the account to qualify for this credit. Account owners can claim the credit yearly after meeting this age requirement.
Utah-based corporations work differently – they can claim a state income tax deduction instead of a credit for contributions up to $2,490 per qualified beneficiary.
Utah taxpayers should know about rollovers. Rolling over funds to another 529 plan after claiming a my529 Utah tax credit has tax implications. The rollover amount must be added back as income on that year’s Utah state income tax form.
Non-Utah residents still get federal tax benefits with my529 accounts. Other states may have their own 529 plans with state-specific tax advantages.
How can you use my529 funds?
My529 accounts offer great flexibility in how you can use your funds. You can tap into these savings for educational needs that go beyond regular college expenses.
Families are encouraged to contribute regularly to their my529 accounts, making it easier to build savings for future education expenses. Friends and family can also contribute by making gift contributions to a my529 account, helping to grow the savings together. It’s important to note that my529 savings may affect eligibility for financial aid, so consider how your contributions interact with potential aid opportunities.
Qualified higher education expenses
My529 funds cover qualified higher education expenses at eligible educational institutions throughout the United States and abroad that participate in federal student aid programs. Here’s what you can pay for:
- Tuition and mandatory fees at colleges, universities, and vocational schools
- Books, supplies, and course materials you need for enrollment
- Computers, peripheral equipment, educational software, and internet access
- Room and board if you’re enrolled at least half-time
Students living in campus dorms with meal plans have straightforward room and board costs. Those who live off-campus can use the funds for groceries and utilities, but these expenses shouldn’t exceed their school’s set limits. Remember to keep all your expense receipts.
K-12 tuition and student loans
My529 funds serve more than just college needs. You can use them to pay K-12 tuition at public, private, or religious schools. The limit stands at $10,000 per beneficiary each year. The funds can also help repay qualified education loans for beneficiaries and their siblings, with a $10,000 lifetime cap per borrower.
Registered apprenticeships
My529 accounts also support career paths beyond traditional college education. The funds cover registered apprenticeships certified by the Secretary of Labor under the National Apprenticeship Act. You can pay for program fees, books, supplies, and required equipment.
You can check program eligibility on the official federal apprenticeship website at apprenticeship.gov.
Can you roll over or transfer my529 funds?
My529 account owners can move their funds to other qualified plans under specific IRS regulations. These rules can give tax advantages and help people avoid penalties if followed correctly.
Roll over to another 529 plan
IRS rules let account owners move their funds from my529 to another 529 plan once every 12 months for the same beneficiary. The funds can move between 529 plans any time if they’re meant for a different qualifying family member of the previous beneficiary.
Account owners need to submit a Withdrawal Request form (Form 300) to my529 to start an outgoing rollover. The receiving 529 plan can also submit this request. Each request needs a date, signature, and payment details. The funds must move within 60 calendar days from withdrawal to qualify as a rollover.
Utah taxpayers should be aware of specific rules regarding rollovers to another state’s 529 plan. They must report the rollover amount as income on their Utah state income tax return for that year, and they will forfeit any Utah state income tax benefits previously claimed on those funds.
Transfer to Roth IRA or ABLE account
SECURE Act 2.0 lets my529 account owners transfer money to the beneficiary’s Roth IRA under certain conditions. The account must be at least 15 years old, the 529 account’s beneficiary must own the Roth IRA, and rollovers can’t go over regular Roth IRA contribution limits. The total lifetime transfers from all 529 accounts to a Roth IRA can’t exceed $35,000 per beneficiary.
Account owners can also move funds from my529 to an Achieving a Better Life Experience (ABLE) account for the same beneficiary or qualifying family member. These moves count toward the $19,000 yearly ABLE contribution limit and need to follow similar rollover rules. This federal rule that allows 529-to-ABLE transfers ends December 31, 2025.
Frequently asked questions
My529 plans offer triple tax benefits: earnings grow tax-deferred at the federal level, withdrawals for qualified education expenses are tax-free, and Utah residents can claim an annual state tax credit of up to $226.59 per beneficiary for contributions.
My529 funds are highly flexible. They can be used for college expenses nationwide, K-12 tuition (up to $10,000 annually), student loan repayments (up to $10,000 lifetime), and even registered apprenticeship programs. This includes costs like tuition, fees, books, supplies, and room and board for eligible students.
My529 provides three main investment options: Target enrollment date (12 portfolios that automatically adjust based on the beneficiary’s age), static (10 portfolios with consistent allocations), and customized (allowing personalized strategies). These options use funds managed by reputable institutions like Vanguard, Dimensional Fund Advisors, and PIMCO.
The total annual asset-based fees range from 0.124% to 0.453%, depending on the investment option chosen.
Yes, you can transfer my529 funds to other accounts under certain conditions. You can roll over to another 529 plan once every 12 months for the same beneficiary or anytime for a different beneficiary who is a family member. Additionally, recent legislation allows transfers to a Roth IRA for the beneficiary (subject to specific rules) or to an ABLE account for eligible individuals.
