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[Utah Code Table of Contents]
[TITLE 53b. Table of Contents]
53B-8a-101 Purpose.
(1) (a) The Legislature finds that the general welfare and well-being of the state are directly related to educational levels and skills of the citizens of the state.
(b) Therefore, a vital and valid public purpose is served by the creation and implementation of programs which encourage and make possible the attainment of higher education by the greatest number of citizens of the state.
(2) (a) The Legislature finds that the state has limited resources to provide additional programs for higher education funding and that the continued operation and maintenance of the state's public institutions of higher education and the general welfare of the citizens of the state will be enhanced by establishing a program which allows citizens of the state to invest money in a public trust for future application to the payment of higher education costs.
(b) The Legislature further finds that the creation of the means of encouragement for citizens to invest in such a program represents the carrying out of a vital and valid public purpose.
(3) (a) In order to make available to the citizens of the state an opportunity to fund future higher education needs, it is necessary that a public trust be established in which moneys may be invested for future educational use.
(b) It may also be necessary to establish and create an
endowment fund, which may be funded with public funds, among
other sources, the income from which may be made available
to account owners to enhance their savings invested for future
higher education costs.
2005
53B-8a-102 Definitions.
As used in this chapter:
(1) "Account agreement" means an agreement between an account owner and the trust entered into under this chapter.
(2) "Account owner" means an individual, firm, corporation, or its legal representative or legal successor, who has entered into an account agreement under this chapter for the advance payment of higher education costs on behalf of a beneficiary.
(3) "Administrative fund" means the moneys used to administer the Utah Educational Savings Plan Trust.
(4) "Beneficiary" means the individual designated in an account agreement to benefit from payments for higher education costs at an institution of higher education.
(5) "Benefits" means the payment of higher education costs on behalf of a beneficiary by the trust during the beneficiary's attendance at an institution of higher education.
(6) "Board" means the board of directors of the Utah Educational Savings Plan Trust which is the state Board of Regents acting in its capacity as the Utah Higher Education Assistance Authority under Title 53B, Chapter 12.
(7) "Endowment fund" means the endowment fund established under Section 53B-8a-107 which is held as a separate fund within the trust.
(8) "Higher education costs" means the certified costs of tuition, fees, room and board, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary at an institution of higher education.
(9) "Institution of higher education" means a qualified proprietary school approved by the board, a two-year or four-year public or regionally accredited private nonprofit college or university or a Utah college of applied technology, with regard to students enrolled in postsecondary training or education programs.
(10) "Program administrator" means the administrator of the trust appointed by the board to administer and manage the trust.
(11) "Program fund" means the program fund created under Section 53B-8a-107 , which is held as a separate fund within the trust.
(12) "Tuition and fees" means the quarterly or semester charges imposed to attend an institution of higher education and required as a condition of enrollment.
(13) "Utah Educational Savings Plan Trust" or "trust" means the trust created under Section 53B-8a-103 .
(14) "Vested account" means an account agreement which
has been in full force and effect during eight continuous
years of residency of the beneficiary in the state while
participating in the trust.
2005
53B-8a-103 Creation of Utah Educational Savings Plan Trust.
(1) There is created the Utah Educational Savings Plan Trust.
(2) The board is the trustee of the trust.
(3) The board, in the capacity of trustee, may:
(a) exercise any authority granted by law to the Board of Regents;
(b) make and enter into contracts necessary for the administration of the trust created under this chapter;
(c) adopt a corporate seal and change and amend it from time to time;
(d) invest moneys within the program fund:
(i) (A) in any investments that are determined by the board to be appropriate and are approved by the state treasurer; or
(B) in mutual funds registered under the Investment Company Act of 1940, consistent with the best interests of a designated beneficiary's higher education funding needs; and
(ii) are in compliance with rules of the State Money Management Council applicable to gift funds;
(e) invest moneys within the endowment fund in any investments that are:
(i) determined by the board to be appropriate;
(ii) approved by the state treasurer; and
(iii) in compliance with rules of the State Money Management Council applicable to gift funds;
(f) enter into agreements with any institution of higher education, any federal or state agency, or other entity as required to implement this chapter;
(g) accept any grants, gifts, legislative appropriations, and other moneys from the state, any unit of federal, state, or local government, or any other person, firm, partnership, or corporation for deposit to the administrative fund, endowment fund, or the program fund;
(h) enter into account agreements with account owners;
(i) make payments to institutions of higher education pursuant to account agreements on behalf of beneficiaries;
(j) make refunds to account owners upon the termination of account agreements pursuant to the provisions of this chapter;
(k) appoint a program administrator and determine the duties of the program administrator and other staff as necessary and fix their compensation;
(l) make provision for the payment of costs of administration and operation of the trust; and
(m) carry out the duties and obligations of the trust
pursuant to this chapter.
2005
53B-8a-104 Office facilities, clerical, and administrative support for endowment trust.
(1) The board shall provide to the trust, by agreement, administrative and clerical support and office facilities and space.
(2) Reasonable charges or fees may be levied against the
trust pursuant to the agreement for the services provided
by the board.
1996
53B-8a-105 Additional powers of board as to savings plan trust.
The board has all powers necessary to carry out and effectuate the purposes, objectives, and provisions of this chapter pertaining to the trust, including the power to:
(1) engage:
(a) one or more investment advisors, registered under the Investment Advisors Act of 1940, with at least 5,000 advisory clients and at least $1,000,000,000 under management, to provide investment advice to the board with respect to the assets held in each account;
(b) an administrator to perform recordkeeping functions on behalf of the trust; and
(c) a custodian for the safekeeping of the assets of the trust;
(2) carry out studies and projections in order to advise account owners regarding present and estimated future higher education costs and levels of financial participation in the trust required in order to enable account owners to achieve their educational funding objective;
(3) contract for goods and services and engage personnel as necessary, including consultants, actuaries, managers, counsel, and auditors for the purpose of rendering professional, managerial, and technical assistance and advice, all of which contract obligations and services shall be payable from any moneys of the trust;
(4) participate in any other way in any federal, state, or local governmental program for the benefit of the trust;
(5) promulgate, impose, and collect administrative fees and charges in connection with transactions of the trust, and provide for reasonable service charges, including penalties for cancellations and late payments;
(6) procure insurance against any loss in connection with the property, assets, or activities of the trust;
(7) administer the funds of the trust;
(8) solicit and accept for the benefit of the endowment fund gifts, grants, and other moneys, including general fund moneys from the state and grants from any federal or other governmental agency;
(9) procure insurance indemnifying any member of the board from personal loss or accountability arising from liability resulting from a member's action or inaction as a member of the board; and
(10) make rules and regulations for the administration
of the trust.
2005
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.
2006
53B-8a-107 Program, endowment, and administrative funds - Investment and payments from funds.
(1) (a) The board shall segregate moneys received by the trust into three funds, the program fund, the endowment fund, and the administrative fund.
(b) No more than two percentage points of the interest earned annually in the endowment fund may be transferred to the administrative fund for the purpose of paying operating costs associated with administering the trust and as required under Sections 53B-8a-103 through 53B-8a-105 .
(c) Transfers may be made from the program fund to the administrative fund to pay operating costs:
(i) associated with administering the trust and as required under Sections 53B-8a-103 through 53B-8a-105 ; and
(ii) as included in the budget approved by the board of directors of the Utah Educational Savings Plan Trust.
(d) All moneys paid by account owners in connection with account agreements shall be deposited as received into separate accounts within the program fund which shall be promptly invested and accounted for separately.
(e) All moneys received by the trust from the proceeds of gifts and other endowments for the purposes of the trust shall be deposited as received into the endowment fund, which shall be promptly invested and accounted for separately.
(f) Any gifts, grants, or donations made by any governmental unit or any person, firm, partnership, or corporation to the trust for deposit to the endowment fund shall be a grant, gift, or donation to the state for the accomplishment of a valid public eleemosynary, charitable, and educational purpose and shall not be included in the income of the donor for Utah tax purposes.
(2) (a) Through March 31, 2005, each account owner under an account agreement may receive an interest in a portion, as determined by policy, of the investment income derived by the endowment fund in any year during which funds are invested in the program fund on behalf of the beneficiary, to be payable as provided in Subsection (2)(c).
(b) The interest in the investment income derived by the endowment fund that accrues to a beneficiary in any year shall be in the ratio that the principal amount paid by the account owner under the account agreement and investment income earned to date under the agreement bears to the principal amount of all moneys, funds, and securities then held in the program fund during the year.
(c) (i) Except as provided in Subsection (2)(c)(ii), at the time any payments or disbursements for higher education costs are made from the trust to any institution of higher education under an account agreement, the trust shall add to that payment from endowment fund income a pro rata portion of the amount calculated pursuant to Subsection (2)(b), which shall be transferred directly to the institution of higher education simultaneously with the payment made from the program fund and shall be used for payment of the higher education costs of the beneficiary, but not to exceed the amount which, in combination with the current payment due from the program fund, equals the beneficiary's higher education costs for the current period of enrollment.
(ii) Effective March 31, 2005, any interest income on the endowment fund accruing to a beneficiary that has not been transferred to an institution of higher education pursuant to Subsection (2)(c)(i) shall be transferred to the beneficiary's program fund account.
(3) Beginning on April 1, 2005:
(a) interest income on the endowment fund may be used to enhance the savings of low income account owners investing in the trust, as provided by rules of the board; and
(b) the original principal in the endowment fund may be transferred to the administrative fund upon approval by the board.
(4) Endowment fund earnings not accruing to a beneficiary under a participation agreement or not transferred to the administrative fund shall be reinvested in the endowment fund.
(5) Moneys accrued by account owners in the program fund of the trust may be used for payments to any institution of higher education.
(6) No rights to any moneys derived from the endowment
fund shall exist if moneys payable under the account agreement
are paid to an education institution which is not an institution
of higher education as defined in Section
53B-8a-102
.
2005
53B-8a-108 Cancellation of agreements.
(1) Any account owner may cancel an account agreement at will.
(2) If an account agreement is cancelled by the account owner, the current account balance shall be disbursed to the account owner less:
(a) an administrative refund fee, which may be charged by the trust, except as provided in Subsection (3); and
(b) any penalty or tax required to be withheld by the Internal Revenue Code.
(3) An administration refund fee may not be levied by the trust if the account agreement is cancelled due to:
(a) the death of the beneficiary; or
(b) the permanent disability or mental incapacity of the beneficiary.
(4) The board shall make rules for the disposition of
monies transferred to an account pursuant to Subsection
53A-8a-107
(2)(c)(ii) and the earnings on those monies
when an account agreement is cancelled.
2005
53B-8a-109 Repayment and ownership of payments and investment income - Transfer of ownership rights.
(1) (a) The account owner retains ownership of all payments made under the account agreement until utilized to pay higher education costs for the beneficiary.
(b) All income derived from the investment of the payments made by the account owner shall be considered to be held in trust for the benefit of the beneficiary.
(2) The institution of higher education shall obtain ownership of the payments made for the higher education costs paid to the institution at the time each payment is made to the institution.
(3) Any amounts that may be paid pursuant to the Utah Educational Savings Plan Trust that are not listed in this section are owned by the trust.
(4) (a) An account owner may transfer ownership rights to another eligible person.
(b) The transfer shall be affected and the property distributed
in accordance with administrative regulations promulgated
by the board or the terms of the account agreement.
2005
53B-8a-110 Effect of payments on determination of need and eligibility for student aid.
No student loan program, student grant program, or other
program administered by any agency of the state, except as
may be otherwise provided by federal law or the provisions
of any specific grant applicable to that law, shall take
into account and consider amounts available for the payment
of higher education costs pursuant to the Utah Educational
Savings Plan Trust in determining need and eligibility for
student aid.
1996
53B-8a-111 Annual audited financial report to governor, Legislature, and state auditor.
(1) The board shall submit an annual audited financial report, prepared in accordance with generally accepted accounting principles, on the operations of the trust by November 1 to the governor, the Legislature, and the state auditor.
(2) The annual audit shall be made either by the state auditor or by an independent certified public accountant designated by the state auditor and shall include direct and indirect costs attributable to the use of outside consultants, independent contractors, and any other persons who are not state employees.
(3) The annual audit shall be supplemented by the following information prepared by the board:
(a) any studies or evaluations prepared in the preceding year;
(b) a summary of the benefits provided by the trust including the number of participants and beneficiaries in the trust; and
(c) any other information which is relevant in order to
make a full, fair, and effective disclosure of the operations
of the trust.
1996
53B-8a-112 Tax considerations.
(1) For tax purposes the property of the trust and its income are governed by Sections 59-7-105 , 59-7-106 , 59-10-114 , and 59-10-201 .
(2) The tax commission, in consultation with the board,
may adopt rules necessary to monitor and implement the tax
provisions referred to in Subsection (1) as related to the
property of the trust and its income.
1996
53B-8a-113 Property rights to assets in trust.
(1) The assets of the trust, including the program fund and the endowment fund, shall at all times be preserved, invested, and expended solely and only for the purposes of the trust and shall be held in trust for the account owners and beneficiaries.
(2) No property rights in the trust shall exist in favor of the state.
(3) The assets may not be transferred or used by the state
for any purposes other than the purposes of the trust.
2005
53B-8a-114 Liberal construction.
This chapter shall be construed liberally in order to
effectuate its legislative intent.
1996
