| (a) Refunds shall be made in accordance with provisions of this subchapter and the prepaid tuition contract, in a manner that will not adversely affect the tax status of the program under applicable provisions of Internal Revenue Code, §529. Refunds shall be governed by this subchapter as amended and Internal Revenue Code, §529, as in effect on the date the request for refund is submitted to the plan manager. (b) Earnings may be paid with a refund only if the board determines that such payment will not adversely affect the actuarial soundness of the fund to pay the costs of program administration and operations and to meet the obligations of the program, as provided by Education Code, §54.770. It is the board's intent that refund amounts will be based on the definitions of "Refund Value," "Reduced Refund Value," or "Transfer Value," in §7.122 of this title (relating to Definitions), as applicable. (c) The purchaser is entitled to a refund following cancellation or termination of a prepaid tuition contract, subject to any limitations imposed by Internal Revenue Code, §529, this subchapter, and the provisions of the prepaid tuition contract. (d) Refunds shall be made to the purchaser of the prepaid tuition contract or, in the event of the purchaser's death, the person designated in the enrollment contract or other legal document to have the right of survivorship. (e) Should a beneficiary terminate his/her student status on or after the date on which the institution denies refunds to students withdrawing for a particular semester, no refund shall be paid under the prepaid tuition contract for amounts relating to such semester. (f) If the prepaid tuition contract is cancelled due to the death or disability of the beneficiary, or due to the receipt of a scholarship by the beneficiary, the purchaser may elect to change the beneficiary or apply for a refund of the Refund Value of the account, less any fees due and payable to the program under the board's fee schedule. The administrative fee will be retained by the program. (g) If the beneficiary redeems fewer tuition units to pay the cost of tuition and required fees than the number of units purchased on behalf of the beneficiary under a prepaid tuition contract, other than to defer redemption as permitted in accordance with Education Code, §54.758, the purchaser may request a refund of the Refund Value of the account, less any fees due and payable under the contract, or transfer the remaining units to another beneficiary in accordance with this subchapter. The administrative fee will be retained by the board. (h) If the beneficiary decides not to attend an institution of higher education within a reasonable amount of time after graduating from high school, the purchaser may elect to: (1) change the beneficiary to another eligible beneficiary; (2) hold the tuition units in the account until the 10th anniversary of the date the beneficiary was projected to graduate from high school, not counting time spent by the beneficiary as an active duty member of the United States armed services; or (3) cancel the contract and request a refund of the Refund Value of the account, less any fees due and payable to the program. The administrative fee will be retained by the board. (i) If the prepaid tuition contract is terminated due to misrepresentation, failure to provide required information or default, the purchaser may apply for a refund of the Reduced Refund Value of the account, less any fees due and payable to the program under the board's fee schedule. The administrative fee will be retained by the program. (j) If the prepaid tuition contract is terminated automatically due to expiration of the 10 year anniversary period specified in §7.133(c) of this title (related to Contract Termination), the purchaser may apply for a refund of the Refund Value of the account, less any fees due and payable to the program under the board's fee schedule. However, the Refund Value will be limited to include only net earnings that have accrued under the contract up until the date the contract has been terminated automatically. (k) In the event of any other cancellation request not addressed separately in this subchapter: (1) if the cancellation request is received prior to the third anniversary of the first payment due date, the purchaser may apply for a refund of the Reduced Refund Value of the account. The administrative fee will be retained by the board; or (2) if the cancellation request is received on or following the third anniversary of the first payment due date, the purchaser may apply for a refund of the Refund Value of the account (for those tuition units held for three or more years) or the Reduced Refund Value (for tuition units held less than three years). The administrative fee will be retained by the board. (l) A lump sum refund may be made within 60 days of receiving a properly completed signed request for refund from the purchaser on a form promulgated by the plan manager, along with any required supporting documentation. Proof of death, disability or scholarship shall be in a form acceptable to the board. (m) Notwithstanding any other provision of this section, the purchaser may designate in the prepaid tuition contract a person who shall have a right of survivorship with respect to purchaser's rights under a prepaid tuition contract; provided that such designation shall in no way affect the purchaser's ability to modify or terminate the contract and receive a refund without the consent or authorization of the designee. The purchaser may change the designation at any time by properly completing and submitting to the plan manager a right of survivorship form. The purchaser shall provide any other information requested by the board in support of the designation. It is the purchaser's responsibility to provide the plan manager with current information for survivorship rights. (n) Distributions or transfers to another qualified tuition plan are governed by §7.137 of this title (relating to Transfers Among 529 Plans) and Education Code, §54.7671. (o) Refunds or distributions that exceed the qualified higher education expenses incurred by the beneficiary during the year of the distribution, or other nonqualified withdrawals, may subject the distributee to income tax liability on any earnings and a tax penalty, as provided by Internal Revenue Code, §529. (p) The number of refunds per year for a single purchaser shall be limited to twice in a 12 month period and shall be for a minimum of 100% of the purchaser's tuition units or in increments of 25 units, whichever is less. |
