| (a) Intent to satisfy tax exempt requirements. This
subchapter, the savings plan, each savings trust agreement, and each
savings trust account hereunder are intended to satisfy all requirements
of:
(1) Internal Revenue Code, §529, and regulations
thereunder; and
(2) federal securities laws.
(b) Media for making payments to savings trust accounts.
Any payment of an amount due to a savings trust account under a savings
trust agreement must be made in cash or by electronic funds transfer.
(c) Excess contributions prohibited.
(1) The maximum contribution limit for a savings trust
account shall be determined and published annually and shall be equal
to the lesser of seven times the cost of one year of undergraduate
tuition, room, board, and required fees, as determined and published
for financial aid purposes, at a U.S. eligible educational institution
that the board determines to be among the highest cost U.S. undergraduate
eligible educational institutions, with the sum so computed then being
rounded down to the nearest $5,000 increment; or a lesser amount determined
by the board. The amount of money that may be contributed to a savings
trust account shall be subject to the limit imposed under Internal
Revenue Code, §529, taking into account the aggregation described
in paragraph (3) of this subsection. To the extent that a contribution
exceeds the amount otherwise permitted by this section, such excess
will be promptly refunded, without interest or earnings, to the account's
owner. A savings trust account for a designated beneficiary that has
reached the maximum contribution limit may continue to accrue investment
earnings. In the event that the board does not determine the maximum
contribution limit for any year, the maximum contribution limit in
effect during the previous year will continue in effect.
(2) The plan manager shall monitor contributions to
each savings trust account that is in the manager's custody, to ensure
compliance with this subsection and any other applicable limits on
contributions. The plan manager shall maintain records to ensure that
the amounts paid or contributed on behalf of each designated beneficiary
are not in excess of the funds required to meet the qualified higher
education expenses of the beneficiary pursuant to Internal Revenue
Code, §529(b)(6).
(3) In application of these rules, the plan manager
shall determine whether the beneficiary of a savings trust account
is the beneficiary of any other qualified tuition program under Internal
Revenue Code, §529, that is maintained by the state, and shall
enforce the foregoing limitation on contributions by aggregating,
as appropriate, the contributions to all prepaid tuition contracts
and the contributions to all savings trust accounts maintained by
the state for the same designated beneficiary. For purposes of this
paragraph, any qualified rollover under Internal Revenue Code, §529,
from another qualified tuition program of this state into a savings
trust account for the same designated beneficiary shall not be treated
as a new contribution to the savings trust account.
(d) Separate accountings. A plan manager shall maintain
a separate accounting for each savings trust account in the manager's
custody.
(e) Investment and earnings control prohibited. Except
as provided in §7.106(f) of this title (relating to Plan Managers),
neither the owner of a savings trust account nor the beneficiary of
that account may control or direct the investment of:
(1) the principal of the account; or
(2) any earnings of the account.
(f) Pledge of interest as security prohibited. Neither
the owner of a savings trust account nor the beneficiary of that account
may:
(1) assign any interest in the account for the benefit
of a creditor;
(2) use any interest in the account as security or
collateral for a loan or other obligation; or
(3) otherwise alienate, sell, transfer, assign, pledge,
encumber, or charge any interest in the account.
(g) Reports. A plan manager shall make reports that
are required by:
(1) Internal Revenue Code, §529; and
(2) any other applicable tax law.
(h) Policies and procedures. Except where in conflict
with Education Code, Chapter 54, Subchapter G, or this subchapter,
the board may adopt any policy or procedure, and such policy or procedure
automatically amends each outstanding savings trust agreement as necessary
for:
(1) the savings plan to obtain or maintain qualification
as a qualified tuition program under Internal Revenue Code, §529;
(2) owners and beneficiaries to obtain or maintain
the federal income tax benefits or favorable treatment that is provided
by Internal Revenue Code, §529; or
(3) the savings plan to obtain or maintain exemption
from registration under federal securities laws.
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| Source Note: The provisions of this §7.103 adopted to be effective July 14, 2002, 27 TexReg 6044; amended to be effective May 13, 2008, 33 TexReg 3775; amended to be effective June 6, 2022, 47 TexReg 3271 |
