La. Admin. Code tit. 28 § VI-301

Current through Register Vol. 50, No. 11, November 20, 2024

Section VI-301 - Education Savings Accounts

A. An education savings account (ESA) is established on behalf of a designated beneficiary to provide the funding necessary for the beneficiary to acquire an undergraduate certificate, associate degree, undergraduate degree, graduate degree or professional degree. ESAs may offer investment options that provide either fixed earnings or variable earnings.

1. The account owner classified under §303. A 1, 2, 3, 4, and 5 shall designate the beneficiary in the owner's agreement.

2. The account owner classified under §303. A.6 may designate the beneficiary in the owner's agreement, provided the beneficiary is not a member of the account owner's family, or authorize the LATTA to select a beneficiary for the account.

3. A beneficiary selected by the LATTA must meet the following criteria:

a. the beneficiary is a Louisiana resident;

b. the federal adjusted income of the beneficiary's family is less than $30,000 or the beneficiary is eligible for a free lunch under the Richard B. Russell National School Act (42 USC 1751 et seq.);

c. the beneficiary is not a member of the account owner's family nor a member of the family of any member or employee of the authority or the Office of Student Financial Assistance;

d. demonstrate superior early academic preparation in the third grade by achieving a score on the Iowa Tests of Basic Skills, Stanford 9 Test or TerraNova Test that is in the top two quartiles; and

e. the guidelines provided by the account owner, if any; provided such guidelines are lawful.

4. Procedure for Selection (Reserved)

B. Program Enrollment Period. An account may be opened and an eligible beneficiary may be enrolled at any time during the calendar year.

C. Completing the Owner's Agreement

1. This agreement must be completed, in full, by the account owner.

2. The account owner shall designate a beneficiary, except as provided in Paragraph A.2 above.

3. The account owner may designate a limited power of attorney to another person who would be authorized to act on the account owner's behalf, in the event the account owner becomes incapacitated.

4. Transfer of account ownership is only permitted as set forth in §313

D. Agreement to Terms. Upon executing an owner's agreement, the account owner agrees to the following statements.

1. Admission to a Postsecondary Educational Institution-that participation in the START Program does not guarantee that a beneficiary will be admitted to any institution of postsecondary education.

2. Payment of Qualified Higher Education Expenses-that participation in the START Program does not guarantee that the full cost of the beneficiary's qualified higher education expenses will be paid at an institution of postsecondary education nor does it guarantee enrollment as a resident student.

3. Maintenance of Continuous Enrollment-that once admitted to an institution of postsecondary education, participation in the START Program does not guarantee that the beneficiary will be permitted to continuously enroll or receive a degree, diploma, or any other affirmation of program completion.

4. Guarantee of Redemption Value-that the LATTA guarantees payment of the redemption value of an ESA that is invested in fixed earnings, subject to the limitations imposed by R.S. 17:3098; however, the LATTA does not guarantee the value of an ESA that is invested in variable earnings.

5. Conditions for Payment of Education Expenses-that payments for qualified higher education expenses under the START Saving Program are conditional upon the beneficiary's acceptance and enrollment at an eligible educational institution.

6. Fees

a. That except for penalties which may be imposed on refunds, the LATTA shall not charge fees for the opening or the maintenance of a fixed earnings account at standard fees established by the LATTA.

b. That fees imposed by investment institutions for opening or maintenance of variable earnings accounts may be charged to the account owner.

c. That financial and investment institutions may be authorized by the LATTA to offer prospective owners information and assistance in opening a START Program account.

7. That an account whose owner is a legal entity or is classified under §303. A.6 cannot be terminated and the funds deposited in the account will not be refunded to the account owner.

8. That an account owner who is a legal entity or is classified under §303. A 6, can change the beneficiary of an account to one or more persons who are not members of the family of the beneficiary in accordance with §313. A.4 c, however, in such case:

a. these transfers may be treated as refunds under federal and state tax laws in which case the account owner will be subject to any associated tax consequences; and

b. the EEs and interest thereon will not be transferred to the new beneficiary (Note that the deposit(s) will be eligible for EEs for the year of the deposit.);

c. the provisions of §301. A.2 shall apply to account owners classified in accordance with §303. A.6

9. Only the account owner or the beneficiary may be designated to receive refunds from the account owned by an account owner who is a natural person other than a natural person classified as an account owner under §303. A.6 In the event of the death of the account owner when the account owner is designated to receive the refund and there is no substitute account owner named, the refund shall be made to the account owner's estate.

10. That in the event an account owner who is a legal entity classified as an account owner under §303. A.4 is dissolved, the beneficiary will become the owner of the account.

11. That in the event an other person classified as an account owner under §303. A.6 dies or is dissolved, the beneficiary will become the account owner, provided that, all the restriction provided in law and these rules regarding account owners classified under §303. A 6, including, but not limited to, use of the funds, refunds, terminations, designation of beneficiary, etc., shall be applicable to the beneficiary that becomes the owner of an account established under §303. A.6 If an account owner classified under §303. A.6 dies or is dissolved and the beneficiary has died or failed to enroll in an eligible college or university by age 25, and no substitute beneficiary has been designated by the account owner, the authority is authorized to designate a new beneficiary who must meet the requirements of §301. A.3 and §303. A.6

E. Acceptance of the Owner's Agreement

1. A properly completed and submitted owner's agreement will be accepted upon receipt.

2. Upon acceptance of the owner's agreement, the LATTA will establish the account of the named beneficiary.

F. Citizenship Requirements. Both an account owner who is not a legal entity and the beneficiary must meet the following citizenship requirements:

1. be a United States citizen; or

2. be a permanent resident of the United States as defined by the U.S. Citizenship and Immigration Services (USCIS) or its successor and provide copies of USCIS documentation with the submission of the owner's agreement; or

3. be lawfully residing in the United States and have a valid Social Security number.

G. Residency Requirements

1. On the date an account is opened, either the account owner or his designated beneficiary must be a Louisiana resident, as defined in §107 of these rules.

2. The LATTA may request documentation to clarify circumstances and formulate a decision that considers all facts relevant to residency.

H. Providing Personal Information

1. The account owner is required to disclose personal information in the owner's agreement, including:

a. his Social Security number;

b. the designated beneficiary's Social Security number;

c. the beneficiary's date of birth;

d. the familial relationship between the account owner and the designated beneficiary, if any;

e. the account owner's prior year's federal adjusted gross income as reported to the Internal Revenue Service; and

f. in the case of an account owner classified under §303. A 6:

i. the Social Security number of the beneficiary's family and authorization from that person for the LATTA to access his annual tax records through the Louisiana Department of Revenue, for the purpose of verifying federal adjusted gross income; and

ii. if applicable, proof that the beneficiary is a ward of the court; or

iii. if applicable, proof the beneficiary is eligible for a free lunch under the Richard B. Russell National School Act (42 USC 1751 et seq.).

2. By signing the owner's agreement, the account owner who is classified under §303. A 1, 2, or 3 (does not include legal entities or other persons classified as account owners under §303. A.6 provides written authorization for the LATTA to access his annual tax records through the Louisiana Department of Revenue, for the purposes of verifying federal adjusted gross income.

3. By signing the owner's agreement:

a. the account owner who is a natural person, other than a natural person classified as an account owner under §303. A 6, certifies that:

i. both account owner and beneficiary are United States citizens or permanent residents of the United States as defined by the U.S. Citizenship and Immigration Services (USCIS) or its successor or be lawfully residing in the United States and have a valid Social Security number; and

(a). if permanent residents have provided copies of USCIS documentation with the submission of the application and owner's agreement; or

(b). if in the United States lawfully with a valid Social Security number have provided the visa or other document(s) from the USCIS evidencing lawful residency and a copy of the Social Security card from the Social Security Administration; and

ii. the information provided in the application is true and correct;

b. the person signing on behalf of an account owner who is a legal entity certifies that:

i. the account owner is a legal entity as defined in rule and the application;

ii. he or she is the designated agent of the legal entity;

iii. he or she is authorized to take any action permitted the account owner;

iv. the account owner acknowledges and agrees that once funds are deposited in a START account, neither the deposits nor the interest earned thereon can be refunded to the account owner;

v. the information provided in the application is true and correct; and

vi. if the beneficiary is not a Louisiana resident, the legal entity fulfills the definition of Louisiana resident as found in rule and the application;

c. the natural person classified as an account owner under §303. A.6 certifies that:

i. the beneficiary is a Louisiana resident;

ii. the federal adjusted income of the beneficiary's family is less than $30,000 or the beneficiary is eligible for a free lunch under the Richard B. Russell National School Act (42 USC 1751 et seq.);

iii. the beneficiary is not a member of the account owner's family nor a member of the family of any member or employee of the authority or the Office of Student Financial Assistance;

iv. the account owner acknowledges and agrees that once funds are deposited in a START account, neither the deposits nor the interest earned thereon can be refunded to the account owner; and

v. the information provided in the application is true and correct.

4. Social Security numbers and federal and state employer identification numbers will be used for purposes of federal and state income tax reporting and to access individual account information for administrative purposes (see §315).

I. Number of Accounts for a Beneficiary. There is no limit on the number of ESAs that may be opened for one beneficiary by different account owners; however, the cumulative credits in all accounts for the same beneficiary may not exceed the maximum allowable account balance for that beneficiary and the cumulative credits in all ESAs for the same beneficiary will be used to determine when these accounts are fully funded and are no longer eligible for EEs.

La. Admin. Code tit. 28, § VI-301

Promulgated by the Tuition Trust Authority, Office of Student Financial Assistance, LR23:713 (June 1997), amended LR 24:436 (March 1998), LR 24:1269 (July 1998), LR 25:1794 (October 1999), LR 26:2262 (October 2000), LR 27:1878 (November 2001), LR 28:450 (March 2002), LR 28:778 (April 1)02), LR 28:2334 (November 2002), LR 30:786 (April 2004), LR 33:443 (March 2007), LR 36:313 (February 2010), LR 41:669 (April 2015), Amended LR 421074 (7/1/2016).

AUTHORITY NOTE: Promulgated in accordance with R.S. 17:3091-3099.2.