53B-8a-106 - Account agreements.
53B-8a-106. Account agreements.
The plan may enter into account agreements with account owners on behalf ofbeneficiaries under the following terms and agreements:
(1) (a) An account agreement may require an account owner to agree to invest a specificamount 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.
(b) Account agreements may be amended to provide for adjusted levels of paymentsbased upon changed circumstances or changes in educational plans.
(c) An account owner may make additional optional payments as long as the totalpayments for a specific beneficiary do not exceed the total estimated higher education costs asdetermined by the executive director.
(d) Subject to Subsections (1)(f) and (g), the maximum amount of a qualified investmentthat a corporation that is an account owner may subtract from unadjusted income for a taxableyear in accordance with Title 59, Chapter 7, Corporate Franchise and Income Taxes, is $1,710 foreach individual beneficiary for the taxable year beginning on or after January 1, 2010, butbeginning on or before December 31, 2010.
(e) Subject to Subsections (1)(f) and (g), the maximum amount of a qualified investmentthat may be used as the basis for claiming a tax credit in accordance with Section 59-10-1017, is:
(i) for a resident or nonresident estate or trust that is an account owner, $1,710 for eachindividual beneficiary for the taxable year beginning on or after January 1, 2010, but beginningon or before December 31, 2010;
(ii) for a resident or nonresident individual that is an account owner, other than ahusband and wife who are account owners and file a single return jointly under Title 59, Chapter10, Individual Income Tax Act, $1,710 for each individual beneficiary for the taxable yearbeginning on or after January 1, 2010, but beginning on or before December 31, 2010; or
(iii) for a husband and wife who are account owners and file a single return jointly underTitle 59, Chapter 10, Individual Income Tax Act, $3,420 for each individual beneficiary:
(A) for the taxable year beginning on or after January 1, 2010, but beginning on or beforeDecember 31, 2010; and
(B) regardless of whether the plan has entered into:
(I) a separate account agreement with each spouse; or
(II) a single account agreement with both spouses jointly.
(f) (i) For taxable years beginning on or after January 1, 2011, the executive directorshall 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 forthe preceding calendar year.
(ii) After making an increase required by Subsection (1)(f)(i), the executive directorshall:
(A) 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 dollarincrement; and
(B) increase 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:
(I) the maximum amount of the qualified investment described in Subsection (1)(e)(ii) as
rounded under Subsection (1)(f)(ii)(A); and
(II) two.
(iii) For purposes of Subsections (1)(f)(i) and (ii), the executive director shall calculatethe consumer price index as provided in Sections 1(f)(4) and 1(f)(5), Internal Revenue Code.
(g) For taxable years beginning on or after January 1, 2011, the executive director shallkeep 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.
(2) (a) Beneficiaries designated in account agreements must be designated after birth andbefore age 19 for an account owner to:
(i) subtract a qualified investment from income under Title 59, Chapter 7, CorporateFranchise and Income Taxes; or
(ii) use a qualified investment as the basis for claiming a tax credit in accordance withSection 59-10-1017.
(b) Account owners may designate a beneficiary age 19 or older, but investments for thatbeneficiary are not eligible to be:
(i) subtracted from income under Title 59, Chapter 7, Corporate Franchise and IncomeTaxes; or
(ii) used as the basis for claiming a tax credit in accordance with Section 59-10-1017.
(3) Each account agreement shall state clearly that there are no guarantees regardingmoney in the plan as to the return of principal and that losses could occur.
(4) Each account agreement shall provide that:
(a) a contributor to, or designated beneficiary under, an account agreement may not directthe investment of any contributions or earnings on contributions;
(b) any part of the money in any account may not be used as security for a loan; and
(c) an account owner may not borrow from the plan.
(5) The execution of an account agreement by the plan may not guarantee in any way thathigher education costs will be equal to projections and estimates provided by the plan or that thebeneficiary named in any account agreement will:
(a) be admitted to an institution of higher education;
(b) if admitted, be determined a resident for tuition purposes by the institution of highereducation;
(c) be allowed to continue attendance at the institution of higher education followingadmission; or
(d) graduate from the institution of higher education.
(6) A beneficiary may be changed as permitted by the rules and regulations of the boardupon written request of the account owner prior to the date of admission of any beneficiary underan account agreement by an institution of higher education so long as the substitute beneficiary iseligible for participation.
(7) An account agreement may be freely amended throughout the term of the accountagreement 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.
(8) Each account agreement shall provide that:
(a) the account agreement may be canceled upon the terms and conditions, and uponpayment of the fees and costs set forth and contained in the board's rules and regulations; and
(b) the executive director may amend the agreement unilaterally and retroactively, if
necessary, to maintain the plan as a qualified tuition program under Section 529, InternalRevenue Code.
Amended by Chapter 6, 2010 General Session