La. Admin. Code tit. 28 § VI-307

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

Section VI-307 - Allocation of Earnings Enhancements (EEs)

A. EEs are state-appropriated funds allocated to an ESA on behalf of the beneficiary named in the account.

a. The EEs for account owners who are classified under §303. A.1 and 3 are calculated based upon the account owner's annual federal adjusted gross income for the year immediately preceding the year for which the beneficiary of the account is being considered for EEs and the account owner's total annual deposits of principal.

b. The EEs for account owners who are classified under §303. A.6 are calculated based:

i. upon the beneficiary's family's annual federal adjusted gross income for the year immediately preceding the year for which the beneficiary of the account is being considered for EEs and the account owner's total annual deposits of principal; or

ii. if the beneficiary is a ward of the court, using the highest EE available and the account owner's total annual deposits of principal.

2. Although allocated to individual accounts, EEs are state funds and shall be held in an escrow account maintained by the state treasurer until disbursed to pay qualified higher education expenses at an eligible education institution as set forth in §307. G

B. Providing Proof of Annual Federal Adjusted Gross Income.

a. For account owners who are classified under §303. A 1, 2, or 3 (does not include legal entities nor other persons classified as account owners under §303. A 6), the account owner's annual federal adjusted gross income for the year immediately preceding the year for which the beneficiary of the account is being considered for EEs is used in computing the annual EE allocation.

b. For account owners who are classified under §303. A 6, the beneficiary's family's annual federal adjusted gross income for the year immediately preceding the year for which the beneficiary of the account is being considered for EEs is used in computing the annual EEs or proof that the beneficiary is a ward of the court.

a. To be eligible in any given year for EEs in accordance with §307 D, the account owner of an ESA classified under §303. A 1, 2, 3, or 4 must:

i. authorize the LATTA to access the account owner's state tax return filed with the Louisiana Department of Revenue for the purpose of obtaining the account owner's federal adjusted gross income; or

ii provide the LATTA a copy of the account owner's federal or state income tax return filed for the year immediately preceding the year in which the beneficiary of the account is being considered for EEs.

b. To be eligible in any given year for EEs in accordance with §307 D, the account owner of an ESA classified under §303. A.6 must:

i. provide authorization from the beneficiary's family for the LATTA to access the beneficiary's family's state tax return filed with the Louisiana Department of Revenue for the purpose of obtaining the federal adjusted gross income of the beneficiary's family; or

ii. provide the LATTA a copy of the beneficiary's family's federal or state income tax return filed for the year immediately preceding the year in which the beneficiary of the account is being considered for EEs; or

iii. provide documentation establishing that the beneficiary is a ward of the court.

a. In completing the owner's agreement, account owners who are classified under §303. A 1, 2, or 3 (does not include legal entities or other persons classified as account owners under §303. A.6 authorize the LATTA to access their records with the Louisiana Department of Revenue for the purpose of verifying the account owners' federal adjusted gross income. In the event the account owner does not file tax information with the Louisiana Department of Revenue, they must provide the LATTA with:

i. a copy of the form filed with the Internal Revenue Service; or

ii. a statement as to why no income tax filing was required of the account owner.

b. In completing the owner's agreement, account owners who are classified under §303. A.6 provide authorization from the beneficiary's family for the LATTA to access their records with the Louisiana Department of Revenue for the purpose of verifying the beneficiary's family's federal adjusted gross income. In the event the beneficiary's family does not file tax information with the Louisiana Department of Revenue, the beneficiary's family must provide:

i. a copy of the form filed with the Internal Revenue Service; or

ii. a statement that the beneficiary lives with them, that they provide more than 50 percent of the beneficiary's support and an explanation as to why the beneficiary's family was not required to file an income tax return; or

iii. provide documentation establishing that the beneficiary is a ward of the court.

4. EEs at the rate prescribed in §307. D cannot be allocated to an ESA unless the LATTA has received verification of an account owner's federal adjusted gross income by the deadline contained in §307. B.5 Interest on EEs will not accrue to the benefit of an ESA until the LATTA has allocated the EEs to the account.

5. If an account owner is classified in §305. A.1 and the tax documents required by §307. B.2 are not received by February 15 immediately following the year for which the beneficiary of the account is being considered for EEs, as an exception to §307 D, the account shall be allocated EEs for the year being considered at the EE rate shown in §307. D for account owners who are members of the family of the beneficiary who report an adjusted gross income of $100,000 and above.

6. Example. An account owner has made deposits in a START account for a beneficiary during calendar year 2010 and desires to receive the highest EE rate authorized for those deposits. If the account owner did not file a Louisiana income tax return for the tax year 2009 or is notified by the LATTA that the Louisiana Department of Revenue could not validate his federal adjusted gross income, he must submit the tax documents for tax year 2009 required by §307. B.2.b so that they are received by the LATTA no later than February 15, 2011, or his EE rate will be defaulted to the rate for account owners who are members of the family of the beneficiary who report an adjusted gross income of $100,000 and above.

C. Earnings Enhancement Rates.

1. The EE rates applicable to an ESA under §303. A.1 and 6 are determined by the federal adjusted gross income of the account owner or the beneficiary's family, as applicable, according to the following schedule.

Reported Federal Adjusted Gross Income	Earnings Enhancement Rate
0 to $29,999	14 percent
$30,000 to $44,999	12 percent
$45,000 to $59,999	9 percent
$60,000 to $74,999	6 percent
$75,000 to $99,999	4 percent
$100,000 and above	2 percent

2. The availability of EEs to be allocated to ESAs is subject to an appropriation by the Louisiana Legislature.

3. In the event that sufficient EEs are not appropriated during any given year, the LATTA shall reduce EE rates, pro rata, as required to limit EEs to the amount appropriated.

D. The EE rates applicable to an ESA established by a person or persons identified in §303. A.4 shall be fixed at the EE rate for account owners who are members of the family of the beneficiary who report an adjusted gross income of $100,000 and above.

E. An ESA established by an authorized account owner identified in §303. A.5 shall not be eligible for EEs.

F. Restrictions on allocation of EEs to ESAs. The allocation of EEs is limited to ESAs which:

1. have not reached the earnings enhancement cap (see §107); and

2. have an account owner who falls under one of the classifications described in §303. A 1, 2, 3, 4, or 6.

G. Frequency of Allocation of EEs to ESAs. EEs will be allocated annually, posted to the accounts as of December 31 of the year earned and reported to account owners before March 31 following the allocation.

H. Rate of Interest Earned on EEs. The rate of interest earned on EEs shall be the rate of return earned on the Savings Enhancement Fund as reported by the state treasurer.

I. Restriction on Use of Earnings Enhancements

1. EEs, and any interest which may accrue thereon, may only be expended in payment of the beneficiary's qualified higher education expenses, or a portion thereof, at an eligible educational institution.

2. EEs, although allocated to a beneficiary's account and reported on the account owner's annual statement, are assets of the state of Louisiana and are not the property of the account owner until disbursed to pay a beneficiary's qualified higher education expenses at an eligible education institution.

La. Admin. Code tit. 28, § VI-307

Promulgated by the Tuition Trust Authority, Office of Student Financial Assistance, LR 23:715 (June 1997), amended LR 24:1271 (July 1998), LR 25:1794 (October 1999), LR 26:1263 (June 2000), LR 26:2263 (October 2000), LR 27:37 (January 2001), LR 27:1222 (August 2001), LR 27:1880 (November 2001), LR 28:779 (April 2002), LR 30:788 (April 2004), LR 30:2302 (October 2004), LR 34:1886 (September 2008), LR 36:2550 (November 2010), Amended LR 421077 (7/1/2016).

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