Section 457-611-11 - FEES AND PENALTIESA. Each participation agreement may provide for an annual administrative fee based on amounts in the program fund accrued daily at an annualized rate not to exceed 1%. Such fees may be used only for program purposes including administrative expenses, the refunding of fees paid by participants or any class of participants, the matching of contributions made by participants or any class of participants, the use of funds to provide scholarships to beneficiaries attending institutions of higher education, or any other purpose allowed under the Act or the Program Act. Customary and usual investment costs may be deducted from the program fund in connection with the investment thereof and are not included in the administrative fees. Customary and usual account maintenance fees may be deducted from an individual account opened by a participant who is not a Maine resident, unless it is opened on behalf of a beneficiary who is a Maine resident.B. Except upon the occurrence of an early termination event, if the participant makes a withdrawal for any purpose other than the payment of qualified higher education expenses, the participant must pay an additional tax or other penalty as provided in federal requirements. Notwithstanding the foregoing, payment of the additional tax does not apply to withdrawals or portions thereof used to pay for qualified higher education expenses that are subsequently refunded to a beneficiary by an institution of higher education and timely recontributed to an account in accordance with federal requirements.C.[Repealed effective December 3, 2001]D. If the Authority determines that the participant or the beneficiary has made any material misrepresentations on the application form, in requests for disbursements or in any other communications with the Authority or with the Authority's designated agents or contractors in their capacities on behalf of the program, the account may be involuntarily liquidated by the Authority and any such misrepresentations shall be deemed to constitute unsworn falsification within the meaning of 17-A MRSA §453. If the Authority liquidates any account pursuant to this provision, the participant will be entitled to a disbursement subject to a penalty of 15% of the portion of the disbursement attributable to investment earnings on amounts contributed to the account.E. Any additional tax payable shall be payable directly to the United States Department of Treasury in accordance with federal requirements.F. When a penalty is assessed the chief executive officer may (i) require that the amount of the penalty be set off from any funds remaining in the account; (ii) collect penalties by retaining a sufficient balance in an account to pay the amount of the penalty; or (iii) collect any unpaid penalties through a set off against Maine income tax refunds pursuant to 36 MRSA §5276-A. This provision will only be applicable to penalties assessed under section 11. D.G. All penalties are in addition to all State and federal taxes that may be due on the distribution.94-457 C.M.R. ch. 611, § 11