Utah Educational Savings Plan 529

Two in one day!

I’ve actually had these two topics sitting as drafts for a week now, but I’ve been busy with other things. Now that I have a touch of a free moment….

Financial planning is one of my hobbies. That and gardening. In many ways, they are quite similar. In both, you put something out of sight and watch it grow. The best gardens are maintained, clean, and watered. The best finances are watched carefully, added to, and left alone to grow. Each requires a certain amount of caretaking, patience, and attention. Each requires a certain amount of weeding to remove the bad (dead plants, weeds, debt). The best similarity of all is that each returns to the caretaker the benefits of the labor.

So it is no surprise that I have and actively use my employer’s 401(k), a savings account, a liquid asset account, credit, budget trackers, and so on. It is also no surprise that I do regular maintenance and check-ups on all my accounts (including loans) to see how and where we are going and to make sure we are still on track. To put it simply, I have a wide-spread financial garden, and while everything is still very much still in the seed stage, I’m actively weeding and watering.

One of the tools that I’ve discovered is the 529 Plan. Simply put, a 529 is a government-sponsored savings plan that lets you put money aside for college expenses. The money is post-tax, but it does carry many tax benefits that vary state to state. As long as the money is withdrawn for educational purposes (tuition, room and board, books, fees, etc.), the interest is tax and penalty free. If it is withdrawn for any other reason, you owe taxes and a penalty (typically 10% but it depends on your plan).

Utah provides the Utah Educational Savings Plan 529 (a.k.a. UESP 529). This plan has been consistently rated as the top plan in the nation. In fact, several financial experts go as far as to recommend that you not use your own state’s plan and subscribe to the UESP 529. As a non-resident, you will be charged a slightly higher fee for any maintenance, but that is still an improvement over the general value of many other state’s plans.

Some of the key benefits for Utah residents include the following:

• An annual tax deduction of up to $3240 per beneficiary if filing jointly.
• Gifting rights of up to $60,000 per beneficiary ($120,000 jointly) without applying tax penalties. This is an excellent way to move your estate to your heirs without Uncle Sam taking a huge chunk.
• Fee wavers for qualifying Utah residents.
• Extremely low fees for all Utah residents.
• One of the top performing portfolios in the nation.

Some of these benefits apply for non-residents. For more details, click the above link.

With all this talk of the collapse of Social Security going on, some have questioned how I can justify sending some of the money I would send to my own retirement towards the education of my children. After all, didn’t I pay for my own education with only limited help? Well, yes, I did. But education expenses keep going up, and if I can help my children gain an education without leaving school in debt (like I did), shouldn’t I do what I can?

I don’t regret for a minute that I paid for my own education; it made it more valuable to me. But I also recognize that education is the best and easiest way to help secure your future. In the words of Gordon B. Hinckley, “The world will largely pay you what it thinks you are worth.” Personally, I think my daughter is worth the world—I intend to help the world see it that way too.

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38 Cents

With yesterday being Easter, I sat back and thought a bit about life over the last few years. I think I finally realized how far we’ve come. When Courtney and I were first married, we came into life with less than I ever thought we’d own.

Our first home, an apartment, was solid, but empty. We had maybe 38 cents to our name, and our very first pieces of furniture were a pair of potted plants and a beat up bookcase I dragged around throughout my college experience. That was it. We even had to run out and buy an air mattress for a bed so that we’d have something to sleep on.

We also didn’t have heat, and since it was January, our house was a balmy 40 degrees or so. We’d pull the plants in close during the night and bundle up to keep us and them alive. During the day, Courtney would turn on the burners to the stove to obtain even a small amount of heat, and we’d boil water for bathing. I think the warmest we ever got the house was around 52, and we lived like that for five days.

Our next piece of furniture was the back seat of our car. It was removable, and since we didn’t have anything else to sit on, we figured why not. Around this time, two guys from our church came by to greet us, see how we were doing, and see if we needed anything. I will never forget their faces, especially when they asked if we needed anything.

We said no.

I doubt they believed us.

Over the next few months, we got a card table for the kitchen table and some cheap stools to sit on. Next came the free couches from my sister. With the fortunate (for us) closings of several furniture stores, we were able to purchase a dresser, coffee table, and end tables at rock bottom prices. To top it all off, a good friend gave us a TV as a belated wedding present.

Yes, life was good. Courtney was about three months pregnant, we had some furniture, and, most importantly, we had heat! Then the air mattress burst at about 1:00 in the morning.

While I’m quite sure that someday we’ll look back on that and laugh, that day has not yet arrived.

The next day while Courtney was at work, I went out and bought our largest purchase yet… a pillow-top mattress set. It is still the single largest and most expensive furniture purchase we have ever made and the only thing we paid full price for.

By the time Katherine was born, we had acquired all the makings of a home even if almost all of it was free, second-hand, built by yours truly, or otherwise acquired. That was all three years ago. Now we own a home and don’t have enough room to contain our lives within it.

So I’m just grateful that 38 cents was enough. I look back and wonder how we made it. I guess we were just love-sick like so many newlyweds are. Love-sick and suffering from frostbite.

Oh well. At the very least, we get a kick out of telling everyone that our first couch had seatbelts.

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