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H.B. 225
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HIGHER EDUCATION SAVINGS INCENTIVE
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PROGRAM AMENDMENTS
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2000 GENERAL SESSION
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STATE OF UTAH
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Sponsor: Patrice M. Arent
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AN ACT RELATING TO HIGHER EDUCATION; INCREASING THE AGE DESIGNATION
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FOR BENEFICIARIES DESIGNATED IN PARTICIPATION AGREEMENTS FROM BIRTH
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TO AGE 16 TO BIRTH TO AGE 18 AS A TAX INCENTIVE; AND MAKING CERTAIN
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TECHNICAL CHANGES.
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This act affects sections of Utah Code Annotated 1953 as follows:
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AMENDS:
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53B-8a-106, as last amended by Chapter 240, Laws of Utah 1999
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Be it enacted by the Legislature of the state of Utah:
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Section 1.
Section
53B-8a-106
is amended to read:
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53B-8a-106. Participation agreements for trust.
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The trust may enter into participation agreements with participants on behalf of
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beneficiaries [pursuant to] under the following terms and agreements:
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(1) (a) Each participation agreement shall require a participant to agree to invest a specific
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amount of money in the trust for a specific period of time for the benefit of a specific beneficiary,
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not to exceed an amount determined by the board.
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(b) Participation agreements may be amended to provide for adjusted levels of payments
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based upon changed circumstances or changes in educational plans.
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(c) A participant may make additional optional payments as long as the total payments for
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a specific beneficiary do not exceed the total estimated higher education costs as determined by
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the board.
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(d) The maximum amount of investments that may be subtracted from federal taxable
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income of a resident or nonresident individual under Subsection
59-10-114
(2)(j) shall be $1,200
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for each individual beneficiary for the 1996 calendar year and an amount adjusted annually
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thereafter to reflect increases in the Consumer Price Index.
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(2) The participation agreement may include a minimum rate of return for the investment
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made by the participant.
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(3) (a) Beneficiaries designated in participation agreements [may] must be designated from
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date of birth through age [16] 18 for the participant to subtract allowable investments from federal
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taxable income under Subsection
59-10-114
(2)(j).
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(b) Participants may designate beneficiaries after age 18, but investments for those
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beneficiaries are not eligible for subtraction from federal taxable income.
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(4) Payment of benefits provided under participation agreements must begin not later than
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the first full fall academic quarter or semester at an institution of higher education following the
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22nd birthday or high school graduation of the beneficiary, whichever is later, unless the
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participant notifies the program administrator to the contrary.
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(5) The execution of a participation agreement by the trust may not guarantee in any way
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that higher education costs will be equal to projections and estimates provided by the trust or that
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the beneficiary named in any participation agreement will:
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(a) be admitted to an institution of higher education;
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(b) if admitted, be determined a resident for tuition purposes by the institution of higher
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education, unless the participation agreement is vested;
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(c) be allowed to continue attendance at the institution of higher education following
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admission; or
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(d) graduate from the institution of higher education.
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(6) Beneficiaries may be changed as permitted by the rules and regulations of the board
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upon written request of the participant prior to the date of admission of any beneficiary under a
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participation agreement by an institution of higher education so long as the substitute beneficiary
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is eligible for participation.
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(7) Participation agreements may be freely amended throughout their terms in order to
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enable participants to increase or decrease the level of participation, change the designation of
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beneficiaries, and carry out similar matters as authorized by rule.
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(8) Each participation agreement shall provide that the participation agreement may be
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canceled upon the terms and conditions, and upon payment of the fees and costs set forth and
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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.