53H-10 - Utah Education Savings
Title 53H > 53H-10
Sections (21)
General Provisions
53H-10-101 - General provisions — Definitions.
53H-10-101(1) As used in this chapter:“Account agreement” means an agreement between an account owner and the Utah Educational Savings Plan entered into under this chapter.”Account owner” means a person, estate, or trust, if that person, estate, or trust has entered into an account agreement under this chapter to save for the higher education costs on behalf of a beneficiary.”Beneficiary” means the individual designated in an account agreement to benefit from the amount saved for higher education costs.”Plan” means the Utah Educational Savings Plan created in Section 53H-10-202. 53H-10-101(2) The Legislature finds that the general welfare and well-being of the state are directly related to educational levels and skills of the citizens of the state.Therefore, a vital and valid public purpose is served by the creation and implementation of programs which encourage and make possible the attainment of higher education by the greatest number of citizens of the state. 53H-10-101(3) The Legislature finds that the state has limited resources to provide additional programs for higher education funding and that the continued operation and maintenance of the state’s public institutions of higher education and the general welfare of the citizens of the state will be enhanced by establishing a plan which allows citizens of the state to invest money in a public trust for future application to the payment of higher education costs.The Legislature further finds that the plan described in Subsection (3)(a) serves a vital and valid public purpose. 53H-10-101(4) In order to make available to the citizens of the state an opportunity to fund future higher education needs, it is necessary that a public trust be established in which money may be invested for future educational use.It may also be necessary to establish and create an endowment fund, which may be funded with public funds, among other sources, the income from which may be made available to account owners to enhance or encourage their savings invested for future higher education costs or for use in scholarship or other college savings incentive programs.
Utah Educational Savings Plan
53H-10-201 - General provisions — Definitions.
As used in this part: 53H-10-201(1) “Administrative fund” means the money used to administer the Utah Educational Savings Plan. 53H-10-201(2) “Board” means the Utah Education Savings Board of Trustees created in Section 53H-10-204. 53H-10-201(3) “Eligible educational institution” means the same as that term is defined in Section 529(e)(5), Internal Revenue Code. 53H-10-201(4) “Endowment fund” means the endowment fund established under Section 53H-10-206, which is held as a separate fund within the Utah Educational Savings Plan. 53H-10-201(5) “Executive director” means the administrator appointed to administer and manage the Utah Educational Savings Plan. 53H-10-201(6) “Federally insured depository institution” means an institution whose deposits and accounts are to any extent insured by a federal deposit insurance agency, including the Federal Deposit Insurance Corporation and the National Credit Union Administration. 53H-10-201(7) “Grantor trust” means a trust, the income of which is for the benefit of the grantor under Section 677, Internal Revenue Code. 53H-10-201(8) “Higher education costs” means qualified higher education expenses as defined in Section 529(e)(3), Internal Revenue Code. 53H-10-201(9) “Owner of the grantor trust” means one or more individuals who are treated as an owner of a trust under Section 677, Internal Revenue Code, if that trust is a grantor trust. 53H-10-201(10) “Program fund” means the program fund created under Section 53H-10-206, which is held as a separate fund within the Utah Educational Savings Plan. 53H-10-201(11) “Qualified investment” means an amount invested in accordance with an account agreement established under this part. 53H-10-201(12) “Tuition and fees” means the quarterly or semester charges imposed to attend an institution of higher education and required as a condition of enrollment.
53H-10-202 - Creation of Utah Educational Savings Plan — Powers and duties of plan — Certain exemptions.
53H-10-202(1) There is created the Utah Educational Savings Plan, which may also be known and do business as:the Utah Educational Savings Plan Trust; oranother related name. 53H-10-202(2) The plan:is a non-profit, self-supporting agency that administers a public trust;shall administer the various programs, funds, trusts, plans, functions, duties, and obligations assigned to the plan:consistent with sound fiduciary principles; andsubject to review of the board; andshall be known as and managed as a qualified tuition program in compliance with Section 529, Internal Revenue Code, that is sponsored by the state. 53H-10-202(3) The plan may:make and enter into contracts necessary for the administration of the plan payable from plan money, including:contracts for goods and services; andcontracts to engage personnel, with demonstrated ability or expertise, including consultants, actuaries, managers, counsel, and auditors for the purpose of rendering professional, managerial, and technical assistance and advice;adopt a corporate seal and change and amend the corporate seal;invest money within the program, administrative, and endowment funds in accordance with the provisions under Section 53H-10-206;enter into agreements with account owners, any eligible educational institution, any federal or state agency, or other entity as required to implement this chapter;solicit and accept any grants, gifts, legislative appropriations, and other money from the state, any unit of federal, state, or local government, or any other person, firm, partnership, or corporation for deposit to the administrative fund, endowment fund, or the program fund;make provision for the payment of costs of administration and operation of the plan;carry out studies and projections to advise account owners regarding:present and estimated future higher education costs; andlevels of financial participation in the plan required to enable account owners to achieve the account owner’s educational funding objective;participate in federal, state, local governmental, or private programs;create public and private partnerships, including investment or management relationships with other 529 plans or entities;promulgate, impose, and collect administrative fees and charges in connection with transactions of the plan, and provide for reasonable service charges;procure insurance:against any loss in connection with the property, assets, or activities of the plan; andindemnifying any member of the board from personal loss or accountability arising from liability resulting from a member’s action or inaction as a member of the plan’s board;administer outreach efforts to:market and publicize the plan and the plan’s products to existing and prospective account owners; andencourage economically challenged populations to save for post-secondary education;adopt, trademark, and copyright names and materials for use in marketing and publicizing the plan and the plan’s products;administer the funds of the plan;sue and be sued in the plan’s own name;own institutional accounts in the plan to establish and administer:scholarship programs; orother college savings incentive programs, including programs designed to enhance the savings of low income account owners investing in the plan; andhave and exercise any other powers or duties that are necessary or appropriate to carry out and effectuate the purposes of this chapter. 53H-10-202(4) Except as provided in Subsection (4)(b), the plan is exempt from the provisions of Title 63G, Chapter 2, Government Records Access and Management Act.The annual audited financial statements of the plan described in Section 53H-10-210 are public records.Financial information that is provided by the plan to the state auditor and posted on the public finance website established by the state auditor in accordance with Section 67-3-12 is a public record. 53H-10-202(5) The plan is subject to:Title 52, Chapter 4, Open and Public Meetings Act; andTitle 63G, Chapter 6a, Utah Procurement Code.
53H-10-203 - Office facilities, clerical, and administrative support for the Utah Educational Savings Plan.
53H-10-203(1) The Utah Board of Higher Education shall provide to the plan, by agreement, administrative support and office facilities and space. 53H-10-203(2) Reasonable charges or fees may be levied against the plan pursuant to the agreement for the services provided by the Utah Board of Higher Education.
53H-10-204 - Powers and duties of board.
53H-10-204(1) There is created the Utah Education Savings Board of Trustees. 53H-10-204(2) The Utah Board of Higher Education shall:appoint the members of the board as follows:not more than three members from the Utah Board of Higher Education; andat least four public members, each of whom possesses skills in one or more of the following:investments;accounting;finance;banking;education;technology; orfinancial operations; anddesignate a member appointed under Subsection (2)(a) as chair. 53H-10-204(3) Each board member serves at the pleasure of the Utah Board of Higher Education. 53H-10-204(4) The board has all powers necessary to carry out and effectuate the purposes, objectives, and provisions of this chapter pertaining to the plan. 53H-10-204(5) The board shall act as a fiduciary of the plan with:a duty of care to act solely in the best interest of the plan’s account owners and beneficiaries;a duty of loyalty putting the plan’s interest ahead of other interests; anda duty to invest with care, skill, prudence, and diligence. 53H-10-204(6) The duties, responsibilities, funds, liabilities, and expenses of the board in oversight and governance of the plan shall be maintained separate and apart from the Utah Board of Higher Education’s other duties, responsibilities, funds, liabilities, and expenses. 53H-10-204(7) The board shall:make policies governing the administration of the plan; andamend policies related to board governance. 53H-10-204(8) The board may appoint advisory committees to aid the board in fulfilling the board’s duties and responsibilities.An advisory committee member may receive compensation and be reimbursed for reasonable expenses incurred in the performance of the member’s official duties as determined by the board.
53H-10-205 - Account agreements.
The plan may enter into account agreements with account owners on behalf of beneficiaries under the following terms and agreements: 53H-10-205(1) An account agreement may require an account owner to agree to invest a specific amount of money in the plan for a specific period of time for the benefit of a specific beneficiary, not to exceed an amount determined by the executive director.Account agreements may be amended to provide for adjusted levels of payments based upon changed circumstances or changes in educational plans.An account owner may make additional optional payments as long as the total payments for a specific beneficiary do not exceed the total estimated higher education costs as determined by the executive director.Subject to Subsections (1)(f) and (g), the maximum amount of a qualified investment that a corporation that is an account owner may subtract from unadjusted income for a taxable year in accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is 1,710 for each individual beneficiary for the taxable year;subject to Subsection (1)(e)(iv), for a resident or nonresident individual that is an account owner, other than a husband and wife who are account owners and file a single return jointly under Title 59, Chapter 10, Individual Income Tax Act, 3,420 for each individual beneficiary:for the taxable year; andregardless of whether the plan has entered into:a separate account agreement with each spouse; ora single account agreement with both spouses jointly; orfor a grantor trust:if the owner of the grantor trust has a single filing status or head of household filing status as defined in Section 59-10-1018, the amount described in Subsection (1)(e)(ii); orif the owner of the grantor trust has a joint filing status as defined in Section 59-10-1018, the amount described in Subsection (1)(e)(iii).For each taxable year, the executive director shall annually increase the maximum amount of a qualified investment described in Subsections (1)(d) and (1)(e)(i) and (ii), by a percentage equal to the increase in the consumer price index for the preceding calendar year.After making an increase required by Subsection (1)(f)(i), the executive director shall:round the maximum amount of the qualified investments described in Subsections (1)(d) and (1)(e)(i) and (ii) increased under Subsection (1)(f)(i) to the nearest 10 dollar increment; andincrease the maximum amount of the qualified investment described in Subsection (1)(e)(iii) so that the maximum amount of the qualified investment described in Subsection (1)(e)(iii) is equal to the product of:the maximum amount of the qualified investment described in Subsection (1)(e)(ii) as rounded under Subsection (1)(f)(ii)(A); andtwo.For purposes of Subsections (1)(f)(i) and (ii), the executive director shall calculate the consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.For each taxable year, the executive director shall keep the previous year’s maximum amount of a qualified investment described in Subsections (1)(d) and (1)(e)(i) and (ii) if the consumer price index for the preceding calendar year decreases. 53H-10-205(2) Beneficiaries designated in account agreements must be designated after birth and before age 19 for an account owner to:subtract a qualified investment from income under Title 59, Chapter 7, Corporate Franchise and Income Taxes; oruse a qualified investment as the basis for claiming a tax credit in accordance with Section 59-10-1017.Account owners may designate a beneficiary age 19 or older, but investments for that beneficiary are not eligible to be:subtracted from income under Title 59, Chapter 7, Corporate Franchise and Income Taxes; orused as the basis for claiming a tax credit in accordance with Section 59-10-1017. 53H-10-205(3) Each account agreement shall state clearly that there are no guarantees regarding money in the plan as to the return of principal and that losses could occur. 53H-10-205(4) Each account agreement shall provide that:a contributor to, or designated beneficiary under, an account agreement may not direct the investment of any contributions or earnings on contributions;any part of the money in any account may not be used as security for a loan; andan account owner may not borrow from the plan. 53H-10-205(5) The execution of an account agreement by the plan may not guarantee in any way that higher education costs will be equal to projections and estimates provided by the plan or that the beneficiary named in any account agreement will:be admitted to an eligible educational institution;if admitted, be determined a resident for tuition purposes by the eligible educational institution;be allowed to continue attendance at the eligible educational institution following admission; orgraduate from the eligible educational institution. 53H-10-205(6) A beneficiary may be changed as permitted by the rules and regulations of the board upon written request of the account owner prior to the date of admission of any beneficiary under an account agreement by an eligible educational institution so long as the substitute beneficiary is eligible for participation. 53H-10-205(7) An account agreement may be freely amended throughout the term of the account agreement in order to enable an account owner to increase or decrease the level of participation, change the designation of beneficiaries, and carry out similar matters as authorized by rule. 53H-10-205(8) Each account agreement shall provide that:the account agreement may be canceled upon the terms and conditions, and upon payment of the fees and costs set forth and contained in the board’s rules and regulations; andthe executive director may amend the agreement unilaterally and retroactively, if necessary, to maintain the plan as a qualified tuition program under Section 529, Internal Revenue Code.
53H-10-206 - Program, administrative, and endowment funds — Investment and payments from funds — Proxy voting — State treasurer access.
53H-10-206(1) The plan shall segregate money received by the plan into three funds, the program fund, the administrative fund, and the endowment fund. 53H-10-206(2) The board shall:invest the plan in a manner that is consistent with the prudent investor rule for trustees established in Title 75B, Chapter 2, Part 9, Uniform Prudent Investor Act;in accordance with the board’s fiduciary responsibilities, make investment decisions with the sole purpose of maximizing the risk-adjusted return on the investments; andto the extent practicable:retain the right to vote investor proxies; orif the investments are commingled with another investor’s funds, request the right to vote investor proxies; andensure proxy voting is exercised to maximize risk-adjusted returns for the exclusive benefit of beneficiaries. 53H-10-206(3) Transfers may be made from the program fund to the administrative fund to pay operating costs:associated with administering the plan and as required under Sections 53H-10-202 through 53H-10-204; andas included in the budget approved by the board. 53H-10-206(4) All money paid by account owners in connection with account agreements shall be deposited as received into separate accounts within the program fund which shall be invested and accounted for separately.Money accrued by account owners in the program fund may be used for:payments to any eligible educational institution;payments to the account owner or beneficiary;transfers to another 529 plan; orother expenditures or transfers made in accordance with the account agreement. 53H-10-206(5) All money received by the plan from the proceeds of gifts and other endowments for the purposes of the plan shall be:deposited, according to the nature of the donation, as received into the endowment fund or the administrative fund; andinvested and accounted for separately.Any gifts, grants, or donations made by any governmental unit or any person, firm, partnership, or corporation to the plan for deposit to the endowment fund or the administrative fund is a grant, gift, or donation to the state for the accomplishment of a valid public eleemosynary, charitable, and educational purpose and is not included in the income of the donor for Utah tax purposes.The endowment fund or the administrative fund may be used to enhance the savings of low income account owners investing in the plan, for scholarships, or for other college savings incentive programs as approved by the board.Transfers may be made between the endowment fund and the administrative fund upon approval by the board.Endowment fund earnings not accruing to a beneficiary under an account agreement, not transferred to the administrative fund, or not otherwise approved by the board for expenditure, shall be reinvested in the endowment fund. 53H-10-206(6) Subsection (2) does not prohibit the board from offering individual account owners a variety of voluntary investment options that have different risk profiles and investment objectives. 53H-10-206(7) The board shall make proxy voting records available to the state treasurer upon the state treasurer’s request.The state treasurer is subject to the same restrictions on disclosure of the proxy voting records as the board.
53H-10-207 - Cancellation of agreements.
53H-10-207(1) Any account owner may cancel an account agreement at will. 53H-10-207(2) If an account agreement is cancelled by the account owner, the current account balance shall be disbursed to the account owner less:an administrative refund fee, which may be charged by the plan, except as provided in Subsection (3); andany penalty or tax required to be withheld by the Internal Revenue Code. 53H-10-207(3) An administration refund fee may not be levied by the plan if the account agreement is cancelled due to:the death of the beneficiary; orthe permanent disability or mental incapacity of the beneficiary.
53H-10-208 - Repayment and ownership of funds in the account — Transfer of ownership rights.
53H-10-208(1) The account owner retains ownership of funds in the account until:funds are used to pay higher education costs for the beneficiary;funds are otherwise disbursed;funds are transferred for administrative costs; orthe account is closed.Funds in the account shall be considered to be held in trust for the benefit of the beneficiary. 53H-10-208(2) Any amounts that may be paid pursuant to the plan that are not listed in this section are owned by the plan. 53H-10-208(3) An account owner may transfer ownership rights to another eligible person.The transfer shall be affected and the property distributed in accordance with administrative regulations promulgated by the board or the terms of the account agreement.
53H-10-209 - Effect of payments on determination of need and eligibility for student aid.
No student loan program, student grant program, or other program administered by any agency of the state, except as may be otherwise provided by federal law or the provisions of any specific grant applicable to that law, shall take into account and consider amounts available for the payment of higher education costs pursuant to the plan in determining need and eligibility for student aid.
53H-10-210 - Annual audit of financial statements.
53H-10-211 - Tax considerations.
53H-10-211(1) For tax purposes the property of the plan and the plan’s income are governed by Section 59-10-201. 53H-10-211(2) The tax commission, in consultation with the board and the plan, may adopt rules necessary to monitor and implement the tax provisions referred to in Subsection (1) as related to the property of the plan and the plan’s income.
53H-10-212 - Property rights to plan assets.
53H-10-212(1) The assets of the plan, including the program fund and the endowment fund, shall at all times be preserved, invested, and expended solely and only for the purposes of the plan and shall be held in trust for the account owners and beneficiaries. 53H-10-212(2) No property rights in the plan shall exist in favor of the state. 53H-10-212(3) The assets may not be transferred or used by the state for any purposes other than the purposes of the plan.
Student Prosperity Savings Program
53H-10-301 - General provisions — Definitions.
As used in this part: 53H-10-301(1) “529 savings account” means a tax-advantaged method of saving for higher education costs on behalf of a particular individual that:meets the requirements of Section 529, Internal Revenue Code; andis managed by the plan. 53H-10-301(2) “Child” means an individual less than 20 years of age. 53H-10-301(3) “Community partner” means a nonprofit organization that provide services to a child who is economically disadvantaged or a family member, legal guardian, or legal custodian of a child who is economically disadvantaged. 53H-10-301(4) “Donation” means a gift, grant, donation, or any other conveyance of money by a person other than the Legislature that is not made directly for the benefit or on behalf of a particular individual. 53H-10-301(5) “Economically disadvantaged” means that a child is:experiencing intergenerational poverty;a member or foster child of a family with an annual income at or below 185% of the federal poverty level;living with a legal custodian or legal guardian with an annual family income at or below 185% of the federal poverty level; orliving with a legal custodian or legal guardian who can attest that the child or the child’s household is receiving services benefitting low-income households or individuals. 53H-10-301(6) “Eligible individual” means an individual who:is under 20 years of age and is a resident of Utah;is economically disadvantaged; andreceives, or has a family member, a foster family member, or a legal custodian or legal guardian who receives, services from a community partner. 53H-10-301(7) “Federal poverty level” means the poverty level as defined by the most recently revised poverty income guidelines published by the United States Department of Health and Human Services in the Federal Register. 53H-10-301(8) “Higher education costs” means the same as that term is defined in Section 53H-10-201, except that the expenses must be incurred at:a credit-granting eligible educational institution within the state system of higher education;a private postsecondary educational institution; ora technical college. 53H-10-301(9) “Intergenerational poverty” means the same as that term is defined in Section 35A-9-102. 53H-10-301(10) “Program” means the Student Prosperity Savings Program created in Section 53H-10-302.
53H-10-302 - Student Prosperity Savings Program.
53H-10-302(1) There is created the Student Prosperity Savings Program. 53H-10-302(2) The program is funded by:appropriations from the Legislature; anddonations made in accordance with Section 53H-10-303. 53H-10-302(3) The plan shall administer the program.The plan shall use the program to create 529 savings accounts in accordance with this part.
53H-10-303 - Donations to the program.
53H-10-303(1) A person may make a donation to the program by:sending the donation to the plan; andincluding with the donation, direction that the donation benefit the program.A person making a donation shall include the person’s name and mailing address with the donation. 53H-10-303(2) The plan shall mail a receipt to the person that makes the donation.The receipt described in Subsection (2)(a) shall state:the name of the person that made the donation;the amount of the donation; andthe date on which the person makes the donation.The date on which the person makes a donation to the program is the date on which the plan receives the donation, unless the plan receives the donation on a Saturday, a Sunday, or a holiday, in which case the date on which the person makes the donation shall be the first business day after the day on which the plan receives the donation.
53H-10-304 - Distribution of program money — Application process — Prioritization — Account agreements.
53H-10-304(1) The plan shall distribute money in the program by creating a 529 savings account for an eligible individual identified by a community partner. 53H-10-304(2) The plan shall carry out the responsibility described in Subsection (1) by establishing a process in which a community partner may apply for an allocation of program money to designate for eligible individuals.The Utah Board of Higher Education shall establish the application process for a community partner to apply for an allocation of program money.The application process described in Subsection (2)(a)(ii) shall include:the criteria for a community partner to apply for an allocation of program money;the criteria that the plan will use to prioritize applications if the dollar amounts requested in the applications exceed the dollar amount available;the requirements for establishing a 529 savings account in the name of an eligible individual; andthe roles and responsibilities of a community partner that makes a successful application for an allocation of program money.A community partner that receives an allocation of program money shall enter into a contract with the plan.The contract described in Subsection (2)(b)(i) shall:define the roles and responsibilities of the community partner and the plan with regard to the community partner’s allocation of program money; andspecify that the individual the community partner identifies to receive a portion of the community partner’s allocation is an eligible individual. 53H-10-304(3) If the plan approves a community partner’s application for an allocation of program money, the plan may not promise or otherwise encumber the allocation to any other person unless the allocation is forfeited under Subsection (5)(b)(ii). 53H-10-304(4) A community partner shall identify each eligible individual who will receive a portion of the community partner’s allocation of program money.After a community partner identifies an eligible individual to receive a portion of the community partner’s allocation, the community partner shall notify the plan of:the amount of the community partner’s allocation that shall transfer to a 529 savings account in the name of the identified eligible individual; andthe amount, if any, that the community partner will be contributing in accordance with Part 2, Utah Educational Savings Plan, to the 529 savings account on behalf of the identified eligible individual. 53H-10-304(5) Upon receiving the information described in Subsection (4)(b), the plan shall establish a 529 savings account for the identified eligible individual, with the community partner as the account owner.The community partner shall inform the beneficiary that:within three years after the day on which the beneficiary graduates from high school, the beneficiary shall enroll in:a credit-granting eligible educational institution within the state system of higher education;a private postsecondary educational institution; ora technical college; andif the beneficiary fails to enroll within three years after the day on which the beneficiary graduates from high school, any money that remains in the 529 savings account shall be returned to the program.After entering into the account agreement described in Subsection (5)(a), the plan shall deposit into the beneficiary’s 529 savings account the amount of the allocation described in Subsection (4)(b)(i).
53H-10-305 - Application of other provisions of this chapter.
The provisions of Part 2 , Utah Educational Savings Plan, except Subsection 53H-10-208(3) , govern the 529 savings accounts established under the Student Prosperity Savings Program.
Education Savings Incentive Program
53H-10-401 - General provisions — Definitions.
As used in this part: 53H-10-401(1) “529 savings account” means the same as that term is defined in Section 35A-9-601. 53H-10-401(2) “Department” means the Department of Workforce Services created in Section 35A-1-103. 53H-10-401(3) “Match” means the same as that term is defined in Section 35A-9-601. 53H-10-401(4) “Qualifying individual” means the same as that term is defined in Section 35A-9-601, except that the term is limited to individuals for whom the department sends information in accordance with Subsection 35A-9-604(3).
53H-10-402 - Report of information to Department of Workforce Services.
Within 30 days of receiving the report described in Subsection 35A-9-604(3) , the plan shall provide an electronic report to the department that lists: 53H-10-402(1) the total amount of deposits:during the calendar year for which the department makes the request; andfor each 529 savings account of which a qualifying individual is an account owner; and 53H-10-402(2) the account number and the name of the beneficiary for each 529 savings account:into which a deposit was made; andfor which a qualifying individual is an account owner.
53H-10-403 - Deposit of match.
53H-10-403(1) The plan shall deposit a match from the Education Savings Incentive Restricted Account, created in Section 35A-9-602, into a 529 savings account in accordance with the provisions of Section 35A-9-605. 53H-10-403(2) If, upon receiving a transfer described in Subsection (1), the plan determines that the 529 savings account into which the plan is to deposit the match has been closed, the plan shall return the match to the department. 53H-10-403(3) The plan shall send the department an electronic receipt of the match deposits.