2023 New York Laws › EDN - Education › Title 1 - General Provisions › Article 14-A - New York State College Choice Tuition Savings Program › 695-E - Program Requirements; Family Tuition Account.

§  695-e.  Program  requirements;  family  tuition  account. 1. Family
tuition accounts established pursuant to the provisions of this  article
shall be governed by the provisions of this section.
2. A family tuition account may be opened by any person who desires to
save money for the payment of the qualified higher education expenses of
the  designated  beneficiary.  An  account  owner  may designate another
person as successor owner of the account in the event of  the  death  of
the  original  account  owner.  Such  person who opens an account or any
successor owner shall be considered the  account  owner  as  defined  in
section six hundred ninety-five-b of this article.
a.  An application for such account shall be in the form prescribed by
the program and contain the following:
(i)  the  name,  address  and   social   security   number,   employer
identification  number,  or individual taxpayer identification number of
the account owner unless a family tuition account  that  was  in  effect
prior  to  the effective date of the chapter of the laws of two thousand
nineteen that amended this subparagraph does not allow  for  a  taxpayer
identification  number,  in  which case a taxpayer identification number
shall be allowed upon the expiration of the contract;
(ii) the designation of a designated beneficiary;
(iii)  the  name,  address,  and  social  security  number,   employer
identification  number,  or individual taxpayer identification number of
the designated beneficiary, unless a family tuition account that was  in
effect  prior  to  the  effective date of the chapter of the laws of two
thousand nineteen that amended this subparagraph does not  allow  for  a
taxpayer  identification number, in which case a taxpayer identification
number shall be allowed upon the expiration of the contract; and
(iv) such other information as the program may require.
b. The comptroller and the corporation may establish a nominal fee for
such application.
3. Any person, including the account owner, may make contributions  to
the account after the account is opened.
4.  Contributions  to accounts may be made in cash or may be deposited
by a taxpayer who has elected to contribute all or a portion of a refund
of personal income tax to an account that  has  been  established  under
this article.
a.  Taxpayer  contributions  shall  be  made  by direct deposit to the
designated account. The amount elected to be contributed by the taxpayer
must  be  at  least  twenty-five  dollars  and  may  be  applied  as   a
contribution only for the tax year in which the refund is issued.
b.  The  election shall be made on a form prescribed by the department
of taxation and finance and filed with the taxpayer's tax return for the
tax year or at  such  other  time  and  in  such  other  manner  as  the
department  may  prescribe.  The  department shall prescribe the maximum
number of accounts to which a taxpayer may elect to contribute a portion
of the refund.
c. The election to contribute all or a portion of a refund  shall  not
be revocable.
d.  All  or a portion of a refund may not be contributed to an account
that has been established under  this  article  if  the  amount  of  the
taxpayer's  elected  refund  for  such  tax year is reduced by any other
sections of the tax law to the amount less than the  minimum  amount  of
contribution authorized under this section.
5.  An  account  owner may withdraw all or part of the balance from an
account on sixty days notice or such shorter period as may be authorized
under rules governing the program. Such rules shall  include  provisions
that  will generally enable the determination as to whether a withdrawal
is a nonqualified withdrawal or a qualified withdrawal.
6. a. An account owner may change the  designated  beneficiary  of  an
account  to  an  individual  who  is a member of the family of the prior
designated beneficiary in accordance with procedures established by  the
memorandum  of  understanding  pursuant to the provisions of section six
hundred ninety-five-c of this article.
b.  An  account  owner  may transfer all or a portion of an account to
another family tuition account, the subsequent designated beneficiary of
which is a member of the  family  as  defined  in  section  529  of  the
Internal Revenue Code of 1986, as amended.
c.  Changes  in  designated  beneficiaries  and  transfers  under this
subdivision shall not be permitted to the extent that they  would  cause
all  accounts for the same beneficiary to exceed the permitted aggregate
maximum account balance.
7. The program shall provide separate accounting for  each  designated
beneficiary.
8.  No account owner or designated beneficiary of any account shall be
permitted to direct the investment of any contributions to an account or
the earnings thereon more than two times in any calendar year.
9. Neither an account owner nor a designated beneficiary  may  use  an
interest in an account as security for a loan. Any pledge of an interest
in an account shall be of no force and effect.
10.  The  comptroller shall promulgate rules or regulations to prevent
contributions on behalf of a designated  beneficiary  in  excess  of  an
amount  that  would cause the aggregate account balance for all accounts
for a designated beneficiary to exceed a  maximum  account  balance,  as
established  from time to time by the comptroller and the corporation on
the basis  of  higher  education  costs  in  the  state,  with  adequate
safeguards  to  prevent more contributions than necessary to provide for
the qualified higher education costs of the beneficiary, as required  to
maintain  the program as a "qualified tuition program" under section 529
of the Internal Revenue Code of 1986, as amended.
11. a. If there is any distribution from an account to any  individual
or  for  the  benefit  of  any  individual  during a calendar year, such
distribution shall be reported to the Internal Revenue Service  and  the
account  owner,  the  designated  beneficiary, or the distributee to the
extent required by federal law or regulation.
b. Statements shall be provided to each account owner  at  least  once
each  year within sixty days after the end of the twelve month period to
which they relate. The statement shall identify the  contributions  made
during  a preceding twelve month period, the total contributions made to
the account through the end of the period, the value of the  account  at
the  end  of  such period, distributions made during such period and any
other information that the comptroller shall require to be  reported  to
the account owner.
c.  Statements  and information relating to accounts shall be prepared
and filed to the extent required by federal and state tax law.
12. a.  A  local  government  or  organization  described  in  section
501(c)(3) of the Internal Revenue Code of 1986, as amended, may open and
become  the account owner of an account to fund scholarships for persons
whose identity will be determined upon disbursement.
b. In the case of any account opened pursuant to paragraph a  of  this
subdivision the requirement set forth in subdivision two of this section
that  a  designated  beneficiary be designated when an account is opened
shall not apply and each individual who receives  an  interest  in  such
account  as  a  scholarship shall be treated as a designated beneficiary
with respect to such interest.
13. An annual fee may be  imposed  upon  the  account  owner  for  the
maintenance of the account.
14. The program shall disclose the following information in writing to
each  account  owner  and  prospective account owner of a family tuition
account:
a. the terms and conditions for purchasing a family tuition account;
b. any restrictions on the substitution of beneficiaries;
c.  the  person  or  entity  entitled to terminate the tuition savings
agreement;
d. the period of time during which a beneficiary may receive  benefits
under the tuition savings agreement;
e.  the  terms  and  conditions  under  which  money  may be wholly or
partially withdrawn from the program, including, but not limited to, any
reasonable charges and fees that may be imposed for withdrawal;
f. the probable tax consequences associated with contributions to  and
distributions from accounts; and
g.  all  other  rights  and  obligations  pursuant  to tuition savings
agreements, and any  other  terms,  conditions,  and  provisions  deemed
necessary   and   appropriate   by   the  terms  of  the  memorandum  of
understanding entered into pursuant to section six hundred ninety-five-c
of this article.
15. Tuition savings agreements shall be subject to section  fourteen-c
of  the  banking  law and the "truth-in-savings" regulations promulgated
thereunder.
16. Nothing in this  article  or  in  any  tuition  savings  agreement
entered  into pursuant to this article shall be construed as a guarantee
by the state or any college that a beneficiary will  be  admitted  to  a
college,  or,  upon admission to a college will be permitted to continue
to attend or will receive a degree from a college.