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Senate Study Bill 1182

Bill Text

PAG LIN
  1  1    Section 1.  Section 12D.2, unnumbered paragraph 2, Code
  1  2 1999, is amended to read as follows:
  1  3    An amount, not to exceed two hundred thousand dollars
  1  4 annually, Funds shall be transferred from the unclaimed
  1  5 property trust fund established in section 556.18 to the
  1  6 administrative fund for the payment of costs of administration
  1  7 and operation of the trust.
  1  8    Sec. 2.  Section 12D.3, subsection 1, paragraph a, Code
  1  9 1999, is amended to read as follows:
  1 10    a.  Each participation agreement shall may require a
  1 11 participant to agree to invest a specific amount of money in
  1 12 the trust for a specific period of time for the benefit of a
  1 13 specific beneficiary.  A participant shall not be required to
  1 14 make an annual contribution on behalf of a beneficiary.  The
  1 15 minimum contribution per beneficiary per year, in a year in
  1 16 which a participant is making a contribution, shall be three
  1 17 hundred fifty dollars, and the maximum contribution shall not
  1 18 exceed two thousand dollars per beneficiary per year adjusted
  1 19 annually to reflect increases in the consumer price index.
  1 20 However, the treasurer of state may set a maximum, as
  1 21 necessary, to maintain compliance with section 529 of the
  1 22 Internal Revenue Code.
  1 23    Sec. 3.  Section 12D.3, subsection 2, Code 1999, is amended
  1 24 to read as follows:
  1 25    2.  Beneficiaries designated in participation agreements
  1 26 may be designated from date of birth up to, but not including,
  1 27 their seventeenth eighteenth birthday.  A substitute
  1 28 beneficiary may be older than age eighteen provided that the
  1 29 substitute beneficiary is not older than the original
  1 30 beneficiary when the substitution is made.
  1 31    Sec. 4.  Section 12D.3, subsection 3, Code 1999, is amended
  1 32 by striking the subsection and inserting in lieu thereof the
  1 33 following:
  1 34    3.  A participant's account balance shall be refunded to
  1 35 the participant, less endowment fund earnings, and less a
  2  1 refund penalty levied by the trust against account balance
  2  2 earnings, if any, in the event an account balance remains in
  2  3 the account for a thirty-day period following the
  2  4 beneficiary's thirtieth birthday.
  2  5    Sec. 5.  Section 12D.5, subsection 1, Code 1999, is amended
  2  6 by striking the subsection and inserting in lieu thereof the
  2  7 following:
  2  8    1.  A participant may cancel a participation agreement at
  2  9 will.  Upon cancellation of a participation agreement, a
  2 10 participant shall be entitled to the return of the
  2 11 participant's account balance, less endowment fund investment
  2 12 earnings, and less a refund penalty levied by the trust
  2 13 against the participant's account balance earnings, if any.
  2 14 The penalty shall be deposited into the administrative fund.
  2 15    Sec. 6.  Section 12D.5, subsection 2, paragraph b, Code
  2 16 1999, is amended to read as follows:
  2 17    b.  In the event of cancellation of a participation
  2 18 agreement for any of the causes listed in paragraph "a", the
  2 19 participant shall be entitled to receive the principal amount
  2 20 of all payments made by the participant under the
  2 21 participation agreement plus the actual program fund
  2 22 investment income earned on the payments, but not the
  2 23 participant's account balance, less endowment fund investment
  2 24 income.
  2 25    Sec. 7.  Section 12D.6, subsection 2, unnumbered paragraph
  2 26 1, Code 1999, is amended to read as follows:
  2 27    In the event the program is terminated prior to payment of
  2 28 higher education costs for the beneficiary, the participant is
  2 29 entitled to a full refund of all payments made under the
  2 30 participation agreement and all investment income credited on
  2 31 all the payments the participant's account balance.
  2 32    Sec. 8.  Section 12D.9, subsection 1, paragraph f, Code
  2 33 1999, is amended to read as follows:
  2 34    f.  Pursuant to section 12D.5, subsection 1, paragraphs "a"
  2 35 and "b", penalties are provided on refunds of earnings which
  3  1 are not used for qualified higher education expenses of the
  3  2 beneficiary, made on account of the death or disability of the
  3  3 designated beneficiary, or made due to scholarship, allowance,
  3  4 or payment receipt as provided in section 529(b)(3) of the
  3  5 Internal Revenue Code.
  3  6    Sec. 9.  EFFECTIVE DATE AND RETROACTIVE APPLICABILITY.
  3  7 This Act, being deemed of immediate importance, takes effect
  3  8 upon enactment and is retroactively applicable to July 1,
  3  9 1998.  
  3 10                           EXPLANATION
  3 11    This bill amends certain Code provisions relating to the
  3 12 Iowa education savings plan trust.
  3 13    The bill removes a previous limitation of $200,000 on the
  3 14 amount of funds which can be transferred from the unclaimed
  3 15 property trust fund established in Code section 556.18 for the
  3 16 payment of trust administration and operation costs, and also
  3 17 changes the minimum trust contribution amount per year from
  3 18 the previous level of $300 per beneficiary to $50 per
  3 19 beneficiary.  The bill provides that a beneficiary may be
  3 20 designated in a participation agreement up to age 18, which
  3 21 represents a one-year increase from the previously specified
  3 22 age of 17, and provides that a substitute beneficiary may be
  3 23 designated who is older than age 18, provided that the
  3 24 substitute beneficiary is not older than the original
  3 25 beneficiary when the substitution takes place.
  3 26    The bill further provides that a participant's account
  3 27 balance will be refunded to the participant, other than
  3 28 endowment fund earnings and a penalty, if a balance remains in
  3 29 the account 30 days following the beneficiary's thirtieth
  3 30 birthday, which replaces provisions which previously specified
  3 31 a birthday or graduation date by which payments under
  3 32 participation agreements were required to commence.
  3 33    The bill additionally deletes refund provisions relating to
  3 34 cancellation of a participation agreement prior to two years
  3 35 from the agreement's original execution date, and different
  4  1 refund provisions relating to cancellation after two years
  4  2 from the original execution date, and replaces them with
  4  3 refund cancellation provisions which apply regardless of when
  4  4 cancellation occurs.  The refund provisions would provide for
  4  5 the return of a participant's account balance, less endowment
  4  6 fund investment income, and less a refund penalty to be levied
  4  7 by the trust against any account balance earnings.  A
  4  8 corresponding change regarding the term account balance is
  4  9 made concerning refunds for reasons specified in Code section
  4 10 12D.5, subsection 2, relating to death, disability,
  4 11 incapacity, and the awarding of a scholarship, and termination
  4 12 of the program prior to payment of higher education costs.
  4 13    The bill takes effect upon enactment and applies
  4 14 retroactively to July 1, 1998.  
  4 15 LSB 2579SC 78
  4 16 rn/jw/5
     

Text: SSB01181                          Text: SSB01183
Text: SSB01100 - SSB01199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

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