2006 Utah Code - 53B-8a-106 — Account agreements.

     53B-8a-106.   Account agreements.
     The trust may enter into account agreements with account owners on behalf of beneficiaries under the following terms and agreements:
     (1) (a) An account agreement may require an account owner to agree to invest a specific amount of money in the trust for a specific period of time for the benefit of a specific beneficiary, not to exceed an amount determined by the program administrator.
     (b) Account agreements may be amended to provide for adjusted levels of payments based upon changed circumstances or changes in educational plans.
     (c) An account owner may make additional optional payments as long as the total payments for a specific beneficiary do not exceed the total estimated higher education costs as determined by the program administrator.
     (d) The maximum amount of investments that may be subtracted from federal taxable income of a resident or nonresident individual under Subsection 59-10-114(2)(i) shall be $1,510 for each individual beneficiary for the 2005 calendar year and an amount adjusted annually thereafter to reflect increases in the Consumer Price Index.
     (2) (a) (i) Beneficiaries designated in account agreements must be designated after birth and before age 19 for the participant to subtract allowable investments from federal taxable income under Subsection 59-10-114(2)(i).
     (ii) If the beneficiary is designated after birth and before age 19, the payment of benefits provided under the account agreement must begin not later than the beneficiary's 27th birthday.
     (b) (i) Account owners may designate beneficiaries age 19 or older, but investments for those beneficiaries are not eligible for subtraction from federal taxable income.
     (ii) If a beneficiary age 19 or older is designated, the payment of benefits provided under the account agreement must begin not later than ten years from the account agreement date.
     (3) Each account agreement shall state clearly that there are no guarantees regarding moneys in the trust as to the return of principal and that losses could occur.
     (4) Each account agreement shall provide that:
     (a) no contributor to, or designated beneficiary under, an account agreement may direct the investment of any contributions or earnings on contributions;
     (b) no part of the money in any account may be used as security for a loan; and
     (c) no account owner may borrow from the trust.
     (5) The execution of an account agreement by the trust may not guarantee in any way that higher education costs will be equal to projections and estimates provided by the trust or that the beneficiary named in any participation agreement will:
     (a) be admitted to an institution of higher education;
     (b) if admitted, be determined a resident for tuition purposes by the institution of higher education, unless the account agreement is vested;
     (c) be allowed to continue attendance at the institution of higher education following admission; or
     (d) graduate from the institution of higher education.
     (6) Beneficiaries may be changed as permitted by the rules and regulations of the board upon written request of the account owner prior to the date of admission of any beneficiary under an account agreement by an institution of higher education so long as the substitute beneficiary is eligible for participation.
     (7) Account agreements may be freely amended throughout their terms in order to enable

account owners to increase or decrease the level of participation, change the designation of beneficiaries, and carry out similar matters as authorized by rule.
     (8) Each account agreement shall provide that:
     (a) the account agreement may be canceled upon the terms and conditions, and upon payment of the fees and costs set forth and contained in the board's rules and regulations; and
     (b) the program administrator may amend the agreement unilaterally and retroactively, if necessary, to maintain the trust as a qualified tuition program under Section 529 Internal Revenue Code.

Amended by Chapter 223, 2006 General Session