2023 Montana Code Annotated › Title 15. Taxation › Chapter 62. Family Education Savings Act › Part 2. Family Education Savings Program Account -- Administration › 15-62-203. Selection of financial institution as program manager -- contract -- termination

15-62-203. Selection of financial institution as program manager -- contract -- termination.
(1) The board shall implement the operation of the program and may contract with one or more financial institutions to act as the program manager to provide management services to the program, including but not limited to investment management, account administration, customer service, and marketing services.
(2) The committee may solicit proposals from financial institutions to act as program managers of the program.
(3) On the recommendation of the committee, the board shall select as program managers the financial institution or institutions from among bidding financial institutions that demonstrate the most advantageous combination, both to potential program participants and to this state, of:
(a) financial stability and integrity;
(b) the quality of the investment products being offered;
(c) the ability of the financial institutions, directly or through a subcontract, to satisfy recordkeeping and reporting requirements;
(d) if applicable, the financial institution's plan for promoting the program and the investment that it is willing to make to promote the program;
(e) the fees, if any, proposed to be charged to persons for maintaining accounts;
(f) the minimum initial contribution and minimum contributions to maintain accounts in the program and the ability to accept contributions through payroll deduction plans and other contribution plans; and
(g) any other benefits to this state or its residents contained in the proposal.
(4) A program manager or its subcontractor shall:
(a) take action required to keep the program in compliance with its contract or the requirements of this chapter to manage the program so that it is treated as a qualified tuition program under section 529 of the Internal Revenue Code, 26 U.S.C. 529;
(b) keep adequate records of each account, keep each account segregated from each other account, and provide the board with the information necessary to prepare statements required by 15-62-201(6) through (8) or file these statements on behalf of the board;
(c) compile and total information contained in statements required to be prepared under 15-62-201(6) through (8) and provide these compilations to the board;
(d) if there is more than one program manager, provide the board with the information to assist the board in determining compliance with policies adopted by the board pursuant to 20-25-902 and to comply with any state or federal tax reporting requirements;
(e) provide representatives of the board, including other contractors or other state agencies, access to the books and records of the program manager to the extent needed to determine compliance with the contract. At least once during the term of any contract, the board, its contractor, or the state agency responsible for examination oversight of the program manager shall conduct an examination to the extent needed to determine compliance with the contract.
(f) hold money invested by or through the financial institution in the name of and for the benefit of the trust and the account owner;
(g) prepare and file any federal or tax filing requirements relating to the program and assist the trustee with respect to any other obligations of the trustee.
(5) A person may not circulate any description of the program, whether in writing or through the use of any media, unless the board or its designee first approves the description.
(6) If the board determines not to renew the appointment of a financial institution as program manager, the board may take action consistent with the interest of the program and the accounts and in accordance with its duties as trustee of the trust. Except as provided in subsection (7), if a contract executed between the board and a financial institution pursuant to this section is not renewed, at the end of the term of the nonrenewed contract:
(a) amounts held in accounts previously established during the term of the contract must remain assets of the trust;
(b) the funds in new accounts established after the termination may not be invested by or through the financial institution unless a new contract is executed; and
(c) the continuing role of the financial institution must be governed by rules or policies established by the board or a special contract and all services provided by the financial institution to accounts continue to be subject to the control of the board as trustee of the trust with responsibility for all accounts in the program.
(7) (a) The board may terminate a contract with a financial institution or prohibit the continued investment of funds by or through a financial institution under subsection (6) at any time for good cause on the recommendation of the committee. If a contract is terminated or investment is prohibited pursuant to this subsection, the trustee shall seek to promptly reinvest program assets directly in its capacity as trustee of the trust or by or through another financial institution that is selected as a program manager by the board and into investment products selected by the board that are as similar as possible to the original investments.
(b) If the termination of a program manager causes an emergency that might lead to a loss of funds to any account owner, the board or trustee may take whatever emergency action is necessary or appropriate to prevent the loss of funds invested pursuant to this chapter.
History: En. Sec. 8, Ch. 540, L. 1997; amd. Sec. 7, Ch. 468, L. 2001; amd. Sec. 4, Ch. 566, L. 2003; amd. Sec. 5, Ch. 549, L. 2005; amd. Sec. 6, Ch. 349, L. 2021.