§ 695-E — Program requirements; family tuition account

New York § 695-E

• Jurisdiction: New York
• Law EDN: Education
• Title 1: General Provisions Article 1 Short Title and Definitions (§§
• Art. 14-A: New York State College Choice Tuition Savings Program

Text

§ 695-e. Program requirements; family tuition account. 1. Family\ntuition accounts established pursuant to the provisions of this article\nshall be governed by the provisions of this section.\n 2. A family tuition account may be opened by any person who desires to\nsave money for the payment of the qualified higher education expenses of\nthe designated beneficiary. An account owner may designate another\nperson as successor owner of the account in the event of the death of\nthe original account owner. Such person who opens an account or any\nsuccessor owner shall be considered the account owner as defined in\nsection six hundred ninety-five-b of this article.\n a. An application for such account shall be in the form prescribed by\nthe program and contain the following:\n (i) the name, address and social security number, employer\nidentification number, or individual taxpayer identification number of\nthe account owner unless a family tuition account that was in effect\nprior to the effective date of the chapter of the laws of two thousand\nnineteen that amended this subparagraph does not allow for a taxpayer\nidentification number, in which case a taxpayer identification number\nshall be allowed upon the expiration of the contract;\n (ii) the designation of a designated beneficiary;\n (iii) the name, address, and social security number, employer\nidentification number, or individual taxpayer identification number of\nthe designated beneficiary, unless a family tuition account that was in\neffect prior to the effective date of the chapter of the laws of two\nthousand nineteen that amended this subparagraph does not allow for a\ntaxpayer identification number, in which case a taxpayer identification\nnumber shall be allowed upon the expiration of the contract; and\n (iv) such other information as the program may require.\n b. The comptroller and the corporation may establish a nominal fee for\nsuch application.\n 3. Any person, including the account owner, may make contributions to\nthe account after the account is opened.\n 4. Contributions to accounts may be made in cash or may be deposited\nby a taxpayer who has elected to contribute all or a portion of a refund\nof personal income tax to an account that has been established under\nthis article.\n a. Taxpayer contributions shall be made by direct deposit to the\ndesignated account. The amount elected to be contributed by the taxpayer\nmust be at least twenty-five dollars and may be applied as a\ncontribution only for the tax year in which the refund is issued.\n b. The election shall be made on a form prescribed by the department\nof taxation and finance and filed with the taxpayer's tax return for the\ntax year or at such other time and in such other manner as the\ndepartment may prescribe. The department shall prescribe the maximum\nnumber of accounts to which a taxpayer may elect to contribute a portion\nof the refund.\n c. The election to contribute all or a portion of a refund shall not\nbe revocable.\n d. All or a portion of a refund may not be contributed to an account\nthat has been established under this article if the amount of the\ntaxpayer's elected refund for such tax year is reduced by any other\nsections of the tax law to the amount less than the minimum amount of\ncontribution authorized under this section.\n 5. An account owner may withdraw all or part of the balance from an\naccount on sixty days notice or such shorter period as may be authorized\nunder rules governing the program. Such rules shall include provisions\nthat will generally enable the determination as to whether a withdrawal\nis a nonqualified withdrawal or a qualified withdrawal.\n 6. a. An account owner may change the designated beneficiary of an\naccount to an individual who is a member of the family of the prior\ndesignated beneficiary in accordance with procedures established by the\nmemorandum of understanding pursuant to the provisions of section six\nhundred ninety-five-c of this article.\n b. An account owner may transfer all or a portion of an account to\nanother family tuition account, the subsequent designated beneficiary of\nwhich is a member of the family as defined in section 529 of the\nInternal Revenue Code of 1986, as amended.\n c. Changes in designated beneficiaries and transfers under this\nsubdivision shall not be permitted to the extent that they would cause\nall accounts for the same beneficiary to exceed the permitted aggregate\nmaximum account balance.\n 7. The program shall provide separate accounting for each designated\nbeneficiary.\n 8. No account owner or designated beneficiary of any account shall be\npermitted to direct the investment of any contributions to an account or\nthe earnings thereon more than two times in any calendar year.\n 9. Neither an account owner nor a designated beneficiary may use an\ninterest in an account as security for a loan. Any pledge of an interest\nin an account shall be of no force and effect.\n 10. The comptroller shall promulgate rules or regulations to prevent\ncontributions on behalf of a designated beneficiary in excess of an\namount that would cause the aggregate account balance for all accounts\nfor a designated beneficiary to exceed a maximum account balance, as\nestablished from time to time by the comptroller and the corporation on\nthe basis of higher education costs in the state, with adequate\nsafeguards to prevent more contributions than necessary to provide for\nthe qualified higher education costs of the beneficiary, as required to\nmaintain the program as a "qualified tuition program" under section 529\nof the Internal Revenue Code of 1986, as amended.\n 11. a. If there is any distribution from an account to any individual\nor for the benefit of any individual during a calendar year, such\ndistribution shall be reported to the Internal Revenue Service and the\naccount owner, the designated beneficiary, or the distributee to the\nextent required by federal law or regulation.\n b. Statements shall be provided to each account owner at least once\neach year within sixty days after the end of the twelve month period to\nwhich they relate. The statement shall identify the contributions made\nduring a preceding twelve month period, the total contributions made to\nthe account through the end of the period, the value of the account at\nthe end of such period, distributions made during such period and any\nother information that the comptroller shall require to be reported to\nthe account owner.\n c. Statements and information relating to accounts shall be prepared\nand filed to the extent required by federal and state tax law.\n 12. a. A local government or organization described in section\n501(c)(3) of the Internal Revenue Code of 1986, as amended, may open and\nbecome the account owner of an account to fund scholarships for persons\nwhose identity will be determined upon disbursement.\n b. In the case of any account opened pursuant to paragraph a of this\nsubdivision the requirement set forth in subdivision two of this section\nthat a designated beneficiary be designated when an account is opened\nshall not apply and each individual who receives an interest in such\naccount as a scholarship shall be treated as a designated beneficiary\nwith respect to such interest.\n 13. An annual fee may be imposed upon the account owner for the\nmaintenance of the account.\n 14. The program shall disclose the following information in writing to\neach account owner and prospective account owner of a family tuition\naccount:\n a. the terms and conditions for purchasing a family tuition account;\n b. any restrictions on the substitution of beneficiaries;\n c. the person or entity entitled to terminate the tuition savings\nagreement;\n d. the period of time during which a beneficiary may receive benefits\nunder the tuition savings agreement;\n e. the terms and conditions under which money may be wholly or\npartially withdrawn from the program, including, but not limited to, any\nreasonable charges and fees that may be imposed for withdrawal;\n f. the probable tax consequences associated with contributions to and\ndistributions from accounts; and\n g. all other rights and obligations pursuant to tuition savings\nagreements, and any other terms, conditions, and provisions deemed\nnecessary and appropriate by the terms of the memorandum of\nunderstanding entered into pursuant to section six hundred ninety-five-c\nof this article.\n 15. Tuition savings agreements shall be subject to section fourteen-c\nof the banking law and the "truth-in-savings" regulations promulgated\nthereunder.\n 16. Nothing in this article or in any tuition savings agreement\nentered into pursuant to this article shall be construed as a guarantee\nby the state or any college that a beneficiary will be admitted to a\ncollege, or, upon admission to a college will be permitted to continue\nto attend or will receive a degree from a college.\n