La. Admin. Code tit. 28 § VI-313

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

Section VI-313 - Substitution, Assignment, and Transfer

A. Substitute Beneficiary. The beneficiary of an ESA may be changed to a substitute beneficiary provided the account owner completes a beneficiary substitution form and the following requirements are met:

1. the substitute beneficiary is a member of the family as defined under §107;

2. the substitute beneficiary meets the citizen/resident alien requirements of §301 F, and, if the account owner is a nonresident of the state of Louisiana, the substitute beneficiary meets the applicable residency requirements (see §301 G);

3. if the substitute beneficiary is not a member of the family of the previous beneficiary:

a. and the account owner is a natural person classified under §303. A 1-5, the account must be refunded to the account owner and a new account must be opened;

b. and the account owner is a legal entity classified under §303. A.4 or 5, a new account shall be opened in the name of the new beneficiary; and

i. 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

ii. the EEs and interest thereon for an account whose owner is classified under §303. A.4 will not be transferred to the new beneficiary; however, the new account will be eligible for EEs for the year the new account is opened;

c. and the account owner is classified under §303. A 6, a new account shall be opened in the name of the new beneficiary only if the beneficiary meets all the requirements of §303. A 6; and

i. 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

ii. the EEs and interest thereon will not be transferred to the new beneficiary; however, the new account will be eligible for EEs for the year the new account is opened;

iii. the provisions of §301. A.2 shall apply to account owners classified in accordance with §305. A.5

B. Substitution/Transfer of Account Ownership. The ownership of an ESA is transferable only with the written approval of the LATTA and only as follows.

1. The account owner who is a natural person, other than a natural person classified as an account owner under §303. A 6, may designate a person who will become the substitute account owner in the event of the original account owner's death. Eligibility for EEs will be based on the substitute account owner's classification at the time of the original account owner's death.

2. In the event of the death of an account owner who is a natural person, other than a natural person classified as an account owner under §303. A 6, who has not named a substitute account owner, the account shall be terminated and the account shall be refunded to the beneficiary, if designated to receive the refund by the account owner, or the account owner's estate.

3. An account owner who is a legal entity classified under §303. A.4 may indicate in the owners agreement that the account shall be transferred to the beneficiary of the account upon his 18^th birthday, or upon his enrollment in an eligible postsecondary institution full time, whichever is later. If the account owner transfers the account in accordance with this section, disbursements may only be made for payment of the qualified higher education expenses of the beneficiary.

4. In the event of the dissolution of an account owner who is a legal entity classified as an account owner under §303. A.4 or 5, the beneficiary shall become the substitute account owner. If the account owner who is a legal entity classified as an account owner under §303. A.4 is dissolved, the beneficiary designated to receive the refund has died, and there is no substitute beneficiary named, the refund shall be made to the beneficiary's estate.

5. In the event of the death or dissolution of an other person classified as an account owner under §303. A 6, the beneficiary shall become the substitute account owner, provided that all the rights and restrictions 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 educational institution by age 25, and no substitute beneficiary has been designated by the account owner, the LATTA shall designate a new beneficiary who must meet the requirements of §301. A.4 and §303. A.6

C. Assignment of Account Ownership. Ownership of an ESA cannot be assigned.

D. Changes to the Owner's Agreement

1. The account owner may request changes to the owner's agreement.

2. Changes must be requested in writing and be signed by the account owner.

3. Changes, if accepted, will take effect as of the date the notice is received by the LATTA.

4. The LATTA shall not be liable for acting upon inaccurate or invalid data which was submitted by the account owner.

5. The account owner will be notified by the LATTA in writing of any changes affecting the owner's agreement which result from changes in applicable federal and state statutes and rules.

La. Admin. Code tit. 28, § VI-313

Promulgated by the Tuition Trust Authority, Office of Student Financial Assistance, LR 23:718 (June 1997), amended LR 24:1274 (July 1998), repromulgated LR 26:2266 (October 2000), amended LR 27:1883 (November 2001), LR 28:780 (April 2002), LR 30:791 (April 2004), Amended LR 421081 (7/1/2016).

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