Senate Study Bill 3175 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON SMITH) A BILL FOR An Act relating to investment direction of participants and 1 beneficiaries in the Iowa educational savings plan trust. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5509XC (3) 87 mm/jh

S.F. _____ Section 1. Section 12D.4, subsection 1, paragraph d, Code 1 2018, is amended to read as follows: 2 d. A participant or beneficiary shall not be permitted to 3 provide investment direction regarding program contributions 4 or earnings held by the trust to the maximum extent permitted 5 under section 529 of the Internal Revenue Code, and shall be 6 permitted to direct that such contributions or earnings be 7 invested in any asset or investment permitted by an individual 8 retirement account under section 408 of the Internal Revenue 9 Code, to the extent not otherwise prohibited under section 10 529 of the Internal Revenue Code . In addition, and to the 11 extent permitted under section 529 of the Internal Revenue 12 Code, the treasurer of state shall develop the maximum number 13 as is administratively feasible of investment strategies for 14 offer to participants and beneficiaries under the trust, which 15 investment strategies shall, to the extent administratively 16 feasible, provide access to all classes and types of assets and 17 investments permitted by an individual retirement account under 18 section 408 of the Internal Revenue Code. 19 Sec. 2. Section 12D.9, subsection 1, paragraph e, Code 2018, 20 is amended to read as follows: 21 e. Pursuant to section 12D.4, subsection 1 , paragraph “d” , 22 a participant or beneficiary shall not only provide investment 23 direction regarding program contributions or earnings held 24 by the trust to the extent permitted by section 529 of the 25 Internal Revenue Code . 26 EXPLANATION 27 The inclusion of this explanation does not constitute agreement with 28 the explanation’s substance by the members of the general assembly. 29 This bill relates to investment direction of participants 30 and beneficiaries in the Iowa educational savings plan trust, 31 also known as the Iowa college savings 529 plan. Under current 32 law in Code chapter 12D (Iowa educational savings plan trust), 33 participants in or beneficiaries of the trust are not permitted 34 to provide investment direction regarding program contributions 35 -1- LSB 5509XC (3) 87 mm/jh 1/ 2

S.F. _____ or earnings held by the trust. The treasurer of state 1 (treasurer) does provide a select number of investment options 2 from which participants may choose to invest account funds. 3 The bill provides that participants or beneficiaries shall 4 be permitted to provide investment direction regarding program 5 contributions or earnings to the maximum extent permitted 6 under Internal Revenue Code (IRC) §529, the federal law 7 governing the qualification of the trust, and provides that 8 such participants or beneficiaries shall be permitted to direct 9 that such contributions or earnings be invested in any asset 10 or investment permitted by an individual retirement account 11 under IRC §408, to the extent not otherwise prohibited under 12 IRC §529. 13 The bill additionally directs the treasurer, to the extent 14 permitted under IRC §529, to develop the maximum number as is 15 administratively feasible of investment strategies for offer 16 under the trust, which investment strategies shall, to the 17 extent administratively feasible, provide access to all classes 18 and types of assets and investments permitted by an individual 19 retirement account under IRC §408. 20 -2- LSB 5509XC (3) 87 mm/jh 2/ 2