Subchapter XII. Delaware College Investment Plan
TITLE 14
Education
Free Public Schools
CHAPTER 34. FINANCIAL ASSISTANCE FOR HIGHER EDUCATION
Subchapter XII. Delaware College Investment Plan
§ 3483. Purpose.
It is the intent and purpose of the General Assembly through this subchapter to establish the Delaware College Investment Plan pursuant to § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section and to create the Delaware College Investment Board to implement and maintain the Plan through the adoption of rules and regulations for the administration of the Plan.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 300, §§ 1-3; 73 Del. Laws, c. 188, § 2.;
§ 3484. Administration; authority.
(a) This subchapter shall be administered by the Delaware College Investment Board, hereinafter referred to as the Board. The State Pension Office and Delaware Higher Education Office shall provide assistance to the Board in the administration of the Plan as directed by the Board chairperson.
(b) The Board shall be composed of the following:
(1) A Board Chairperson, selected by the Governor;
(2) The Secretary of Finance or the Secretary's designee;
(3) A member of the public appointed by the Delaware Higher Education Office, subject to the approval of the Secretary of Education; and
(4) Two public members, who by reason of their education and experience are qualified to serve, appointed by the Governor.
(c) The Board shall adopt such rules and regulations as it deems necessary and proper to administer this subchapter and to ensure the Plan's compliance with § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section.
(d) The Board shall publish an annual report to the Governor and General Assembly detailing its activities on or before September 30 of each year.
(e) The terms of the public members shall be staggered. The first appointed public member shall serve for a term of 1 year and the second appointed public member shall serve for a term of 2 years. Thereafter, public members shall serve for a term of 3 years. Public members shall be eligible for reappointment.
(f) Members of the Board overseeing the Delaware College Investment Plan may be reimbursed for mileage expenses incident to their duties.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 114, § 1; 72 Del. Laws, c. 300, §§ 2, 3; 73 Del. Laws, c. 188, § 2; 74 Del. Laws, c. 68, § 19; 75 Del. Laws, c. 350, § 164; 77 Del. Laws, c. 431, §§ 11, 12.;
§ 3485. Definitions.
As used in this subchapter:
(1) "Account" means an individual account, a trust account or a savings account established in accordance with this subchapter.
(2) "Account owner" means the individual, individuals, or the trustee of a trust identified at the time the account is opened as having the right to withdraw funds from the account.
(3) "Designated beneficiary" means, except as provided in § 3490 of this title, the individual designated at the time the account is opened as having the right to receive a qualified withdrawal for the payment of qualified higher education expenses or, if such designated beneficiary is replaced in accordance with § 3490 of this title, such replacement.
(4) "Financial institution" means a bank, a commercial bank, a national bank, a savings bank, a savings and loan, a thrift institution, a credit union, an insurance company, a trust company, a mutual fund, an investment firm or other similar entity authorized to do business in this State.
(5) "Higher education institution" means an eligible education institution as defined in § 135(c)(3) of Title 26 of the United States Code [26 U.S.C. § 135(c)(3)].
(6) "Member of the family" shall have the same meaning as contained in § 529(e) of Title 26 of the United States Code [26 U.S.C. § 529(e)] or successor section.
(7) "Nonqualified withdrawal" means a withdrawal from an account that is not:
a. A qualified withdrawal;
b. A withdrawal made as the result of the death or disability of the designated beneficiary;
c. A withdrawal made as the result of a scholarship (or allowance or payment described in § 135(d)(1)(B) or (C) of Title 26 of the United States Code [26 U.S.C. § 135(d)(1)(B) or (C)]) received by the designated beneficiary, but only to the extent of the amount of such scholarship, allowance or payment; or
d. A rollover or change in the designated beneficiary described in § 3490 of this title.
(8) "Plan" means the Delaware College Investment Plan established by this subchapter.
(9) "Qualified higher education expenses" means tuition and other permitted expenses as presently set forth in § 529(e) of Title 26 of the United States Code [26 U.S.C. § 529(e)] or as hereafter permitted by such successor or amended section for the enrollment or attendance of a designated beneficiary at a higher education institution.
(10) "Qualified withdrawal" means a withdrawal from an account to pay the qualified higher education expenses of the designated beneficiary, but only if the withdrawal is made in accordance with the requirements of the Plan.
(11) "Trust" means a trust which is revocable or irrevocable and which has at least 1 individual as its current beneficiary.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 300, §§ 1, 2; 73 Del. Laws, c. 188, § 2; 76 Del. Laws, c. 149, §§ 1-3.;
§ 3486. Powers of the Board.
The Board shall have the following powers, duties and functions:
(1) To establish, develop, implement and maintain the Plan in a manner consistent with the provisions of this subchapter and § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or such successor section to obtain the benefits provided by such section for the Plan and its participants;
(2) To adopt rules and regulations for the general administration of the Plan;
(3) To maintain, invest and reinvest the funds contributed into the Plan consistent with the investment restrictions established by the Board. The investment restrictions shall be consistent with the objectives of the Plan and the Board shall exercise the judgment and care then prevailing which people of prudence, discretion and intelligence exercise in the management of their own affairs with due regard to the probable income and level of risk from investments of money belonging to the State in accordance with the policies established by the Board. The Board may consult with the Investment Subcommittee of the Board of Pension Trustees in the development of investment alternatives; and
(4) To make and enter into any and all contracts, agreements or arrangements and to retain, employ and contract for the services of private and public financial institutions, depositories, consultants, investment advisors or managers, third party plan administrators, research and technical and other services necessary or desirable for carrying out the purposes of this subchapter.
71 Del. Laws, c. 71, § 1; 70 Del. Laws, c. 186, § 1; 72 Del. Laws, c. 300, § 2; 73 Del. Laws, c. 188, § 2.;
§ 3487. The Program.
(a) An account owner may establish an account by making an initial contribution to the Plan in the name of the designated beneficiary. Once a contribution is made it becomes part of the Plan and subject to this subchapter.
(b) Any person may make a contribution to an account once an account is opened. If the account owner is a trust, the trustee must consent to the contribution.
(c) Contributions to an account shall be made only in cash.
(d) Total contributions to all accounts shall not exceed those reasonably necessary, considering the return on contributions and the age and circumstances of the designated beneficiary, to provide for the qualified higher education expenses of the beneficiary. The Board shall establish maximum contribution limits applicable to Plan accounts and shall require such information from the account owner and the designated beneficiary to establish the limit as it relates to such account.
(e) Separate records and accounting shall be required by the Plan for each account and reports shall be made no less frequently than annually to the account owner and the designated beneficiary.
(f) The Plan shall be permitted to collect application, account or administrative fees to defray the costs of the Plan. The application, account or administrative fees must be approved by the Board.
(g) In the case of an account owner which is a trust, the Board shall require such information from the account owner as is necessary to establish compliance with the Plan.
71 Del. Laws, c. 71, § 1; 71 Del. Laws, c. 402, § 1; 72 Del. Laws, c. 300, § 2; 73 Del. Laws, c. 188, § 2; 76 Del. Laws, c. 149, §§ 4, 5.;
§ 3488. Investment direction.
(a) Except as permitted in § 529 of Title 26 of the United States Code [26 U.S.C. § 529] and regulations thereunder, no person shall have the right to direct the investment of any contributions to or earnings from the Plan.
(b) Neither the Plan, the Board and each of its members nor the State shall insure any account or guarantee any rate of return or any interest rate on any contribution; nor shall they or any one of them be liable for any loss incurred by any person as a result of participating in the Plan.
(c) The Board and each of its members shall be entitled to the immunities set forth in Chapter 40 of Title 10, and in addition, no member of the Board shall be liable for any act or omission made during the member's tenure on the Board, or for any loss incurred by any person as a result of the participation by any Board member in the Plan. Further, the State shall indemnify each Board member who is a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, arising by reason of such member's participation in the Plan, against any expenses (including attorney's fees if the Attorney General shall determine that such Board member is not entitled to representation by the State), judgments, fines and amounts paid in settlement actually and reasonably incurred by that member in connection with such action, suit or proceeding, if that member acted in good faith and in a manner that member reasonably believed to be in the best interest of the State, and with respect to any criminal action or proceeding, so long as that member had no reasonable cause to believe that that member's conduct was unlawful. Any expenses incurred by such Board member in defending a civil, administrative or investigative action, suit or proceeding shall be paid by the State in advance of the final disposition of such action, suit or proceeding upon authorization by a majority of the members of the Board and by the Governor of the State.
(d) The Board in the exercise of its sole discretion and without liability is specifically authorized to remove the Plan's funds from any financial institution and to reinvest the funds in a similar or different investment alternative at another financial institution at any time.
71 Del. Laws, c. 71, § 1; 70 Del. Laws, c. 186, § 1; 72 Del. Laws, c. 300, § 2; 73 Del. Laws, c. 188, § 2.;
§ 3489. Prohibitions.
(a) No account nor any interest in an account shall be assignable or pledged or otherwise used to secure or obtain a loan or other advancement.
(b) No refund of a qualified educational expense payment may be paid by a higher education institution directly to the designated beneficiary or to the account owner. Any refund of qualified tuition expenses owed by a higher education institution on account of an overpayment of educational expenses must be refunded to the Plan for credit to the designated beneficiary's account.
(c) A qualified withdrawal that is used to pay for qualified education expenses must be paid jointly to the designated beneficiary and the higher education institution or directly to the higher education institution. A payment of qualified education expenses may not be made directly to the beneficiary.
(d) Total contributions to all accounts established on behalf of a particular beneficiary in excess of those reasonably necessary to meet the designated beneficiary's qualified higher education expenses are prohibited.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 300, § 2; 73 Del. Laws, c. 188, § 2.;
§ 3490. Designated beneficiary.
(a) An account owner shall have the right at any time to change the designated beneficiary of an account to another individual who is a member of the family of the former designated beneficiary, and, in the case of an account owner which is a trust, to another person who is also a beneficiary of the trust.
(b) An account owner shall have the right at any time to direct that all or a portion of an account be transferred to the account of another beneficiary if the designated beneficiaries are members of the same family, and, in the case of an account owner which is a trust, to the account of another beneficiary if the designated beneficiary is also a beneficiary of the trust.
(c) The right to change the designated beneficiary or to transfer between accounts contained in subsections (a) and (b) of this section may be denied if, under regulations adopted by the Board, the exercise of the right would result in either excess contributions to an account or the exercise of impermissible investment direction by the account owner.
71 Del. Laws, c. 71, § 1; 73 Del. Laws, c. 188, § 2; 76 Del. Laws, c. 149, §§ 6, 7.;
§ 3491. Account withdrawals; penalties.
(a) Withdrawal from an account may be made on 30 days' written notice to the Board or on such shorter notice as the Board may by regulation provide. A withdrawal shall be designated as a qualified withdrawal or a nonqualified withdrawal and the application shall provide such information and be made on such forms as the Board shall find are necessary to enable the Board to determine the nature of the withdrawal.
(b) An account withdrawal paid to or for the benefit of any person during any calendar year shall be reported to the person and the Internal Revenue Service. The report shall be made at the time and contain such information as required by law.
(c) The Board shall establish a more than de minimis penalty, at the minimum amount necessary to satisfy the requirements of § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section for a nonqualified withdrawal on the portion of the withdrawal that constitutes income under § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section.
(d) Penalties collected under this section may be used to defray the costs of the Plan.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 300, § 2; 73 Del. Laws, c. 188, § 2.;