AssetBook is proud to formally introduce its newest integration partner, Utah Educational Savings Plans (USEP). Many of our advisors have given high praise to USEP, so we wanted to share some information about their 529 platform.
- As of 2011, assets in direct-sold vs advisor-sold 529 plans were even—50 percent of the industry was with direct-sold plans, where the other 50 percent was with advisor-sold plans.
- Since then, direct-sold plans have continued to see the largest growth in the industry.
- As of the second quarter in 2016, direct-sold plans have $127 billion in assets versus $108 billion for advisor-sold plans.
- More advisors are going toward direct-sold plans due to lower costs, simplicity, and age-based options.
Federal Tax Benefits
- Earnings exempt from federal income tax if used
- for qualified higher education expenses
- Accounts held outside taxable estate
- Treated as completed gift to the beneficiary
- Five-year election (IRS Form 709)
State Tax Benefits
- The rule of thumb regarding tax benefits and 529s is to tell people to look at their state’s plan first. If they have a state plan that offers tax benefits, they may want to invest in their state’s plan. It depends on their individual tax situation.
- Looking at the graphic, the 16 states in blue either have no state income tax or no state tax incentives for residents. Residents of these states don’t have any enticement to stay within their state’s plan, so it affords them the opportunity to shop around and consider other states’ 529 plans.
- The six states in green are tax parity states: Arizona, Montana, Kansas, Missouri, Pennsylvania, and Maine. Think about tax parity like the anti-home-court advantage—there’s a tax incentive for investing in that state’s 529 plan, but the state will offer the same incentive for any plan they choose, whether it’s the home plan or not.
- The states in grey offer tax benefits. Some states might not have tax benefits that outweigh the fees or the tax benefit might not be an incentive. The account owner might also want to invest up to the maximum benefit for their state, and then invest anything beyond that amount in another state’s plan.
- Each account owner must consider his or her individual tax situation.
- The “all-in” asset-weighted fee includes the underlying expense ratio of the funds plus the UESP Administrative Asset Fee.
- Highly ranked by Morningstar, Kiplinger’s, Money magazine, and consumer advocate Clark Howard. UESP is one of three gold-rated Morningstar plans, and UESP has received Morningstar’s top rating 11 of 13 years.
- UESP offers both Vanguard and Dimensional funds.
For more information, contact UESP directly.
Utah Educational Savings Plan (UESP) Direct: 801.869.8926 | uesp.org Toll Free: 800.418.2551 | Fax: 801.321.7299