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H.B. 225

             1     

HIGHER EDUCATION SAVINGS INCENTIVE

             2     
PROGRAM AMENDMENTS

             3     
2000 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Sponsor: Patrice M. Arent

             6      AN ACT RELATING TO HIGHER EDUCATION; INCREASING THE AGE DESIGNATION
             7      FOR BENEFICIARIES DESIGNATED IN PARTICIPATION AGREEMENTS FROM BIRTH
             8      TO AGE 16 TO BIRTH TO AGE 18 AS A TAX INCENTIVE; AND MAKING CERTAIN
             9      TECHNICAL CHANGES.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          53B-8a-106, as last amended by Chapter 240, Laws of Utah 1999
             13      Be it enacted by the Legislature of the state of Utah:
             14          Section 1. Section 53B-8a-106 is amended to read:
             15           53B-8a-106. Participation agreements for trust.
             16          The trust may enter into participation agreements with participants on behalf of
             17      beneficiaries [pursuant to] under the following terms and agreements:
             18          (1) (a) Each participation agreement shall require a participant to agree to invest a specific
             19      amount of money in the trust for a specific period of time for the benefit of a specific beneficiary,
             20      not to exceed an amount determined by the board.
             21          (b) Participation agreements may be amended to provide for adjusted levels of payments
             22      based upon changed circumstances or changes in educational plans.
             23          (c) A participant may make additional optional payments as long as the total payments for
             24      a specific beneficiary do not exceed the total estimated higher education costs as determined by
             25      the board.
             26          (d) The maximum amount of investments that may be subtracted from federal taxable
             27      income of a resident or nonresident individual under Subsection 59-10-114 (2)(j) shall be $1,200


             28      for each individual beneficiary for the 1996 calendar year and an amount adjusted annually
             29      thereafter to reflect increases in the Consumer Price Index.
             30          (2) The participation agreement may include a minimum rate of return for the investment
             31      made by the participant.
             32          (3) (a) Beneficiaries designated in participation agreements [may] must be designated from
             33      date of birth through age [16] 18 for the participant to subtract allowable investments from federal
             34      taxable income under Subsection 59-10-114 (2)(j).
             35          (b) Participants may designate beneficiaries after age 18, but investments for those
             36      beneficiaries are not eligible for subtraction from federal taxable income.
             37          (4) Payment of benefits provided under participation agreements must begin not later than
             38      the first full fall academic quarter or semester at an institution of higher education following the
             39      22nd birthday or high school graduation of the beneficiary, whichever is later, unless the
             40      participant notifies the program administrator to the contrary.
             41          (5) The execution of a participation agreement by the trust may not guarantee in any way
             42      that higher education costs will be equal to projections and estimates provided by the trust or that
             43      the beneficiary named in any participation agreement will:
             44          (a) be admitted to an institution of higher education;
             45          (b) if admitted, be determined a resident for tuition purposes by the institution of higher
             46      education, unless the participation agreement is vested;
             47          (c) be allowed to continue attendance at the institution of higher education following
             48      admission; or
             49          (d) graduate from the institution of higher education.
             50          (6) Beneficiaries may be changed as permitted by the rules and regulations of the board
             51      upon written request of the participant prior to the date of admission of any beneficiary under a
             52      participation agreement by an institution of higher education so long as the substitute beneficiary
             53      is eligible for participation.
             54          (7) Participation agreements may be freely amended throughout their terms in order to
             55      enable participants to increase or decrease the level of participation, change the designation of
             56      beneficiaries, and carry out similar matters as authorized by rule.
             57          (8) Each participation agreement shall provide that the participation agreement may be
             58      canceled upon the terms and conditions, and upon payment of the fees and costs set forth and


             59      contained in the board's rules and regulations.




Legislative Review Note
    as of 1-10-00 12:32 PM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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