Print Friendly HOUSE BILL NO. 548
– College Savings Program, revised
HOUSE BILL NO. 548
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H0548......................................................by STATE AFFAIRS
COLLEGE SAVINGS PROGRAM - Amends and adds to existing law to revise powers
and duties of the State College Savings Program Board; to revise college
savings program requirements; to revise limitations of the college savings
program chapter; to allow policies instead of rules; and to provide
procedures for unclaimed amounts.
02/21 House intro - 1st rdg - to printing
02/22 Rpt prt - to Educ
03/04 Rpt out - rec d/p - to 2nd rdg
03/05 2nd rdg - to 3rd rdg
03/06 3rd rdg - PASSED - 65-0-5
AYES -- Anderson, Andrus, Barrett, Bayer, Bedke, Bell, Bilbao, Black,
Block, Bock, Boe, Bolz, Bowers, Brackett, Bradford, Chadderdon,
Chavez, Chew, Clark, Collins, Crane, Eskridge, Hart, Harwood,
Henbest, Jaquet, Killen, King, Kren, Labrador, Lake, LeFavour,
Loertscher, Luker, Marriott, Mathews, McGeachin, Mortimer, Moyle,
Nielsen, Nonini, Pasley-Stuart, Patrick, Pence, Raybould, Ringo,
Roberts, Ruchti, Rusche, Sayler, Schaefer, Shepherd(02),
Shepherd(08), Shirley, Shively, Smith(30), Smith(24), Stevenson,
Thayn, Thomas, Trail, Vander Woude, Wills, Wood(27), Mr. Speaker
NAYS -- None
Absent and excused -- Durst, Hagedorn, Henderson, Snodgrass, Wood(35)
Floor Sponsor - Boe
Title apvd - to Senate
03/07 Senate intro - 1st rdg - to Educ
03/13 Rpt out - rec d/p - to 2nd rdg
03/14 2nd rdg - to 3rd rdg
03/18 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai(Sagness), McGee, McKague, McKenzie,
Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
NAYS -- None
Absent and excused -- Pearce
Floor Sponsor - Jorgenson
Title apvd - to House
03/18 To enrol - Rpt enrol - Sp signed
03/19 Pres signed
03/20 To Governor
03/25 Governor signed
Session Law Chapter 275
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 548
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE STATE COLLEGE SAVINGS PROGRAM; AMENDING SECTION 33-5401, IDAHO
3 CODE, TO REVISE DEFINITIONS; AMENDING SECTION 33-5402, IDAHO CODE, TO
4 REVISE POWERS AND DUTIES OF THE STATE COLLEGE SAVINGS PROGRAM BOARD AND TO
5 MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 33-5404, IDAHO CODE, TO
6 REVISE COLLEGE SAVINGS PROGRAM REQUIREMENTS; AMENDING SECTION 33-5407,
7 IDAHO CODE, TO REVISE LIMITATIONS OF THE COLLEGE SAVINGS PROGRAM CHAPTER
8 AND TO ALLOW POLICIES INSTEAD OF RULES; AND AMENDING CHAPTER 54, TITLE 33,
9 IDAHO CODE, BY THE ADDITION OF A NEW SECTION 33-5410, IDAHO CODE, TO PRO-
10 VIDE PROCEDURES FOR UNCLAIMED ACCOUNTS.
11 Be It Enacted by the Legislature of the State of Idaho:
12 SECTION 1. That Section 33-5401, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 33-5401. DEFINITIONS. As used in this chapter, the following terms have
15 the following meanings unless the context clearly denotes otherwise:
16 (1) "Account" means an individual trust account or savings account estab-
17 lished as prescribed in this chapter.
18 (2) "Account owner" means the person or state or local government organi-
19 zation designated in the agreement governing the account as having the right
20 to withdraw moneys from the account before the account is disbursed to or for
21 the benefit of the designated beneficiary.
22 (3) "Board" means the state college savings program board created in sec-
23 tion 33-5402, Idaho Code.
24 (4) "Designated beneficiary," except as provided in section 33-5404,
25 Idaho Code, means, with respect to an account, the person individual desig-
26 nated at the time the account is opened as the person individual whose higher
27 education expenses are expected to be paid from the account or, if this desig-
28 nated beneficiary is replaced in accordance with section 33-5404, Idaho Code,
29 the replacement beneficiary.
30 (5) "Eligible educational institution" shall have the meaning provided in
31 26 U.S.C. section 529.
32 (6) "Financial institution" means any state bank, national bank, savings
33 bank, savings and loan association, credit union, insurance company, brokerage
34 firm or other similar entity that is authorized to do business in this state.
35 (6) "Higher education institution" means any of the following:
36 (a) An institution described in the higher education act of 1965 (P.L.
37 89-329; 79 Stat. 1219; 20 U.S.C. sections 1001 et seq.);
38 (b) An area vocational educational school as defined in 20 U.S.C. section
40 (c) An institution regulated by the state board of education.
41 (7) "Member of the family" shall have the meaning as provided in 26
42 U.S.C. section 529.
43 (8) "Nonqualified withdrawal" means an account withdrawal that is not one
1 (1) of the following:
2 (a) A qualified withdrawal;
3 (b) A withdrawal made as the result of the death or disability of the
4 designated beneficiary of an account;
5 (c) A withdrawal that is made on account of a scholarship as defined in
6 26 U.S.C. section 117 or an educational allowance as defined in 26 U.S.C.
7 section 25A(g)(2);
8 (d) A rollover or change of the designated beneficiary.
9 (9) "Person" means an individual, a trust, an estate, a partnership, an
10 association, a foundation, a guardianship, a corporation, or a custodian under
11 the Idaho uniform transfers to minors act.
12 (10) "Program" means the college savings program established under this
14 (1 01) "Qualified higher education expenses" shall have the meaning pro-
15 vided in 26 U.S.C. section 529(e)(3).
16 (1 12) "Qualified withdrawal" means a withdrawal from an account to pay the
17 qualified higher education expenses of the designated beneficiary of the
18 account, but only if the withdrawal is made in accordance with this chapter.
19 SECTION 2. That Section 33-5402, Idaho Code, be, and the same is hereby
20 amended to read as follows:
21 33-5402. STATE COLLEGE SAVINGS PROGRAM BOARD -- COLLEGE SAVINGS PROGRAM
22 -- POWERS AND DUTIES. There is hereby created the state college savings pro-
23 gram board. The board shall consist of the state treasurer or his designee who
24 shall serve as chair, the governor or designee, the state controller or desig-
25 nee, the attorney general or designee, the superintendent of public instruc-
26 tion or designee, and the secretary of state or designee. A quorum shall be
27 necessary to transact business. Members of the board shall be compensated by
28 their appointing entity. The state college savings program board shall:
29 (1) Develop and implement the program in a manner consistent with this
30 chapter through the adoption of rules, guidelines and procedures;
31 (2) Retain professional services, if necessary, including accountants,
32 auditors, consultants and other experts;
33 (3) Seek rulings and other guidance from the United States department of
34 the treasury, the internal revenue service and the state tax commission relat-
35 ing to the program;
36 (4) Make changes to the program required for the participants in the pro-
37 gram to obtain the federal income tax benefits or treatment provided by sec-
38 tion 529 of the Internal Revenue Code of 1986, as amended .;
39 (5) Interpret, in rules, policies, guidelines and procedures, the provi-
40 sions of this chapter broadly in light of its purpose and objectives;
41 (6) Charge, impose and collect administrative fees and service charges in
42 connection with any agreement, contract or transaction relating to the pro-
44 (7) Select the financial institution or institutions to act as the depos-
45 itory and manager of the program in accordance with this chapter;
46 (8) Enter into contracts, within the limit of funds available therefor,
47 acquire services and personal property, and do and perform any acts that may
48 be necessary in the administration of the program;
49 (9) Establish, in its discretion, a trust or other method of segregating
50 the funds of participants in the program from the general funds of the state,
51 the funds of the board and the funds of the members of the board;
52 (10) Administer the program and any trust established by the board as
53 instrumentalities of the state under section 529 of the Internal Revenue Code
1 of 1986, as amended, and the federal securities law, including the securities
2 act of 1933, as amended, the trust indenture act of 1939, as amended, and the
3 investment company act of 1940, as amended.
4 SECTION 3. That Section 33-5404, Idaho Code, be, and the same is hereby
5 amended to read as follows:
6 33-5404. PROGRAM REQUIREMENTS. (1) The program shall be operated through
7 the use of accounts. An account may be opened by any person who desires to
8 save to pay the qualified higher education expenses of a person. Minors may
9 open an account which cannot be disaffirmed pursuant to section 32-103, Idaho
10 Code. A person may open an account by satisfying each of the following
12 (a) Completing an application in the form prescribed by the board. The
13 application shall include the following information:
14 (i) The name, address and social security number or employer iden-
15 tification number of the contributor;
16 (ii) The name, address and social security number of the account
17 owner if the account owner is not the contributor;
18 (iii) The name, address and social security number of the designated
20 (iv) The certification relating to no excess contributions required
21 by subsection (13) of this section;
22 (v) Any other information that the board may require;
23 (b) Paying the one-time application fee established by the board;
24 (c) Making the minimum contribution required by the board or by opening
25 an account;
26 (d) Designating the type of account to be opened if more than one (1)
27 type of account is offered.
28 (2) Any person may make contributions to an account after the account is
30 (3) Contributions to accounts may be made only in cash.
31 (4) Account owners may withdraw all or part of the balance from an
32 account on sixty (60) days' notice, or a shorter period as may be authorized
33 by the board, under rules prescribed by the board. These rules shall include
34 provisions that will generally enable the board or program manager to deter-
35 mine if a withdrawal is a nonqualified withdrawal or a qualified withdrawal.
36 The rules may, but need not, require one (1) or more of the following:
37 (a) Account owners seeking to make a qualified withdrawal or other with-
38 drawal that is not a nonqualified withdrawal shall provide certifications,
39 copies of bills for qualified higher education expenses or other support-
40 ing material;
41 (b) Qualified withdrawals from an account shall be made only by a check
42 payable as designated by the account owner.
43 (5) An account owner may change the designated beneficiary of an account
44 to an individual who is a member of the family of the former designated bene-
45 ficiary in accordance with procedures established by the board.
46 (6) On the direction of an account owner, all or a portion of an account
47 may be transferred to another account of which the designated beneficiary is a
48 member of the family of the designated beneficiary of the transferee account.
49 (7) Changes in designated beneficiaries and rollovers under this section
50 are not permitted if the changes or rollovers would violate either of the fol-
51 lowing provisions of this section relating to excess contributions or to
52 investment choice.
53 (8) Each account shall be maintained separately from each other account
1 under the program.
2 (9) Separate records and accounting shall be maintained for each account
3 for each designated beneficiary.
4 (10) No contributor to, account owner of or designated beneficiary of any
5 account may direct the investment of any contributions to an account or the
6 earnings from the account.
7 (11) If the board terminates the authority of a financial institution to
8 hold accounts and accounts must be moved from that financial institution to
9 another financial institution, the board shall select the financial institu-
10 tion and type of investment to which the balance of the account is moved
11 unless the internal revenue service provides guidance stating that allowing
12 the account owner to select among several financial institutions that are cur-
13 rent contractors would not cause a plan to cease to be a qualified tuition
15 (12) Neither an account owner nor a designated beneficiary may use an
16 interest in an account as security for a loan. Any pledge of an interest in an
17 account is of no force and effect.
18 (13) The board shall adopt rules to prevent contributions on behalf of a
19 designated beneficiary in excess of those necessary to pay the qualified
20 higher education expenses of the designated beneficiaries. The rules shall
21 address the following:
22 (a) Procedures for aggregating the total balances of multiple accounts
23 established for a designated beneficiary;
24 (b) The establishment of a maximum total balance that may be held in
25 accounts for a designated beneficiary;
26 (c) The board shall review the quarterly reports received from partici-
27 pating financial institutions and certify that the balance in all quali-
28 fied tuition programs, as defined in section 529 of the Internal Revenue
29 Code, of which that person is the designated beneficiary does not exceed
30 the lesser of:
31 (i) A maximum college savings amount established by the board from
32 time to time;
33 (ii) The cost in current dollars of qualified higher education
34 expenses that the contributor reasonably anticipates the designated
35 beneficiary will incur;
36 (d) Requirements that any excess balances with respect to a designated
37 beneficiary be promptly withdrawn in a nonqualified withdrawal or rolled
38 over to another account in accordance with this section.
39 (14) If there is any distribution from an account to any person or for the
40 benefit of any person during a calendar year, the distribution shall be
41 reported to the internal revenue service and the account owner or the desig-
42 nated beneficiary to the extent required by federal law.
43 (15) The financial institution shall provide statements to each account
44 owner at least once each year within thirty-one (31) days after the twelve
45 (12) month period to which they relate. The statement shall identify the con-
46 tributions made during a preceding twelve (12) month period, the total contri-
47 butions made through the end of the period, the value of the account as of the
48 end of this period, distributions made during this period and any other mat-
49 ters that the board requires be reported to the account owner.
50 (16) Statements and information returns relating to accounts shall be pre-
51 pared and filed to the extent required by federal or state tax law.
52 (17) A state or local government or organization described in section
53 501(c)(3) of the Internal Revenue Code may open and become the account owner
54 of an account to fund scholarships for persons whose identity will be deter-
55 mined after an account is opened.
1 (18) In the case of any account described in subsection (17) of this sec-
2 tion, the requirement that a designated beneficiary be designated when an
3 account is opened does not apply and each person who receives an interest in
4 the account as a scholarship shall be treated as a designated beneficiary with
5 respect to the interest.
6 (19) Any social security numbers, addresses or telephone numbers of indi-
7 vidual account holders and designated beneficiaries that come into the posses-
8 sion of the board are confidential, are not public records and shall not be
9 released by the board.
10 SECTION 4. That Section 33-5407, Idaho Code, be, and the same is hereby
11 amended to read as follows:
12 33-5407. LIMITATIONS OF CHAPTER. (1) Nothing in this chapter shall be
13 construed to:
14 (a) Give any designated beneficiary any rights or legal interest with
15 respect to an account unless the designated beneficiary is the account
17 (b) Guarantee that a designated beneficiary will be admitted to an higher
18 eligible education institution or be allowed to continue enrollment at or
19 graduate from an higher eligible education institution located in this
20 state after admission;
21 (c) Establish state residency for a person merely because the person is a
22 designated beneficiary;
23 (d) Guarantee that amounts saved pursuant to the program will be suffi-
24 cient to cover the qualified higher education expenses of a designated
26 (2) Nothing in this chapter establishes any obligation of this state or
27 any agency or instrumentality of this state to guarantee for the benefit of
28 any account owner, contributor to an account or designated beneficiary any of
29 the following:
30 (a) The return of any amounts contributed to an account;
31 (b) The rate of interest or other return on any account;
32 (c) The payment of interest or other return on any account;
33 (d) Tuition rates or the cost of related higher education expenditures.
34 (3) Under rules policies adopted by the board, every contract, applica-
35 tion, deposit slip or other similar document that may be used in connection
36 with a contribution to an account shall clearly indicate that the account is
37 not insured by this state and neither the principal deposited nor the invest-
38 ment return is guaranteed by this state.
39 SECTION 5. That Chapter 54, Title 33, Idaho Code, be, and the same is
40 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
41 ignated as Section 33-5410, Idaho Code, and to read as follows:
42 33-5410. UNCLAIMED ACCOUNTS. Unclaimed accounts shall be subject to the
43 provisions of section 14-506, Idaho Code. The date upon which the account
44 owner is deemed to have last communicated that the owner is currently aware of
45 his interest in the account shall not occur prior to the eighteenth birthday
46 of the designated beneficiary.
STATEMENT OF PURPOSE
The College Savings Program Board recently completed a successful
transition to a new program manager. During the transition, the
Board and the incoming program manager determined that minor
adjustments and clarifications to the statutory provisions
governing the program will aid in the administration of the
program. The requested changes to definitions clarify who can own
an account and be identified as a beneficiary and align the
definitions used in the statute with the Internal Revenue Code. The
revisions also clarify the role of the Board in administering the
program and eliminate the requirement that the Board establish
rules duplicating requirements in the Internal Revenue Code. New
language will allow the Board to authorize minors to open accounts.
This will encourage young people to save for their own education.
Lastly, a new section clarifies when dormant accounts will be
subject to the unclaimed property laws.
Name: Liza Carberry,
Investment Manager, State Treasurer's Office
Phone: (208) 332-2997
STATEMENT OF PURPOSE/FISCAL NOTE H 548