1. A participant may cancel a participation agreement at will.
a. If the participation agreement is canceled by a participant prior to the expiration of two years from the date of original execution of the participation agreement, the participant shall receive one hundred percent of the principal amount of all contributions made by the participant, but any program fund investment income or endowment fund investment income which has been credited to the participant's account shall be retained by the trust to cover administration expenses.
b. After a participation agreement has been in effect for two years, participants shall be entitled to the return upon cancellation of the agreement of the principal amount of all contributions made by participants plus actual program fund investment income on the contributions, but not endowment fund investment income, less a refund penalty to be levied by the trust. The penalty shall be deposited into the administrative fund.
2. a. Upon the occurrence of any of the following circumstances, no refund penalty shall be levied by the trust in the event of termination* of a participation agreement:
b. In the event of cancellation of a participation agreement for any of the causes listed in paragraph "a", the participant shall be entitled to receive the principal amount of all payments made by the participant under the participation agreement plus the actual program fund investment income earned on the payments, but not endowment fund investment income.
(1) Death of the beneficiary.
(2) Permanent disability or mental incapacity of the beneficiary.
(3) The beneficiary is awarded a scholarship, as defined in section 529 of the Internal Revenue Code, but only to the extent the refund of earnings does not exceed the scholarship amount.
98 Acts, ch 1172, §5
Referred to in §12D.6, 12D.9
*Cancellation of a participation agreement probably intended; corrective legislation is pending
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