What Fees Are Associated with a 529 Plan in Utah?

It is important to understand all the fees associated with Utah's 529 plan before getting started. Learn all the 529 fees and avoid surprises with Sootchy.

November 19, 2020
Sootchy Team
What Fees Are Associated with a 529 Plan in Utah?

For families in every state, 529 plans offer an opportunity to save up for one of the biggest expenses in a child’s life – higher education. While this typically means spending time at a college or university, 529 plans can also help to cover the cost of private elementary or secondary education, trade schools, or apprenticeships, making them a useful tool with powerful tax benefits and flexible applications. One downside to many 529 plans is the fact that they generally come with fees that can cut into an account’s earnings and undermine the entire purpose of the plan; luckily, families have the option to shop around and choose from virtually any 529 plan offered by any state, including Utah’s my529 plan – a popular option. So, what fees are associated with a 529 plan in Utah? To find out, keep reading as the experts at Sootchy explain.

The Fees Associated with Utah’s 529 Plan

Although fees are common across all 529 plans, some are pricier than others and can put a serious dent in your college savings; in fact, the cost of a 529 plan can vary widely from one state to another. Direct-sold 529 plans – those provided by the state itself – tend to have lower fees than advisor-sold plans, which makes them attractive to many families. Utah’s version of the 529 plan, called my529, is one of the least expensive direct-sold plans out there.

Generally speaking, there are three types of fees you could get hit with when maintaining a 529 education savings plan: account maintenance fees, program management fees, and investment expenses. Below, we’ll look at how each of these fees might come into play for someone with a 529 plan in Utah:

Account Maintenance Fee

Many states’ 529 plans come with an account maintenance fee, which typically costs anywhere from $10 to $25 a year (though many are waived or reduced under certain circumstances). Utah, however, has no account maintenance fee for their 529 plan, which saves account owners a small sum each year.

Program Management Fee

Most 529 plans come with some form of program management fee, which covers the services of whatever entity manages the assets in a plan. Like other fees, these vary widely from state to state; in Utah, this fee ranges from 0.1% to 0.15%.

Investment Expenses

In addition to the cost of maintaining the account itself, a 529 plan must also cover the expenses related to its investments. Mutual funds are the most common option, and since they’re overseen by some fund manager or other, they come with a fee; as you might expect, passively managed funds have higher fees than actively managed ones, since they mean more work for that manager. As a result, the investment expenses can very within a particular program.

With Utah’s 529 plan, these fees tend to fall between 0.015% and 0.047%, though investments in an FDIC-insured account don’t carry a fee. If you choose either the Customized Age-Based or Customized Static investment options, the fee can range from 0% to 0.375%; it all depends on what assets you decide to invest in.

How Do Utah’s 529 Plan Fees Compare to Fees in Other States?

Now that we’ve gone over the fees associated with a Utah 529 plan, let’s place these numbers in context. Among all the states, Utah’s 529 plan is not the cheapest, but it’s definitely on the lower end of the spectrum. In South Carolina, for instance, an account owner who invests $10,000 could wind up paying only $26 in fees over a 10-year period, while someone with a 529 plan in North Dakota can expect to pay more than $800. In Utah, fees would add up to $179 in this scenario.

If you break down the individual fees associated with each plan, it’s easy to see where the discrepancy comes from. Take the program management fee: In Mississippi, a 529 plan comes with a 0.6% fee to cover this cost, one of the highest percentages among all the available plans, while Utah’s 0.1% fee means account owners with a my529 plan get to hang onto more of their money over time.

It’s also important to note that, although fees are undoubtedly a key point to consider when selecting a 529 plan, they’re hardly the only measure of a plan’s earning potential. An actively managed investment will carry higher fees than a passively managed one, but the former may also perform much better, delivering higher earnings that offset those fees.

In addition, some states offer tax advantages to residents who use that state’s plan, potentially saving an account owner hundreds of dollars in state income taxes. If you’re planning regular and sizeable contributions to your 529 plan, it’s worth looking into whether your state provides a tax credit or deduction that can make its plan more affordable, even if it comes with higher fees.

Turn to the Sootchy Team for Help Opening or Managing a 529 Plan in Utah

As though the process of picking out the right 529 plan wasn’t complicated enough, figuring out what you need to do to open a 529 plan in Utah, manage an existing plan, or receive contributions from friends and family only adds to the complexity. With help from the team at Sootchy, all of these tasks are made much easier; all you need to do is download the Sootchy app and you’re well on your way toward saving what you need to cover the cost of educating your loved one. Visit us online or download our app to learn more today.



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