D.C. Mun. Regs. tit. 9, r. 9-155

Current through Register Vol. 71, No. 36, September 6, 2024

Rule 9-155 - DISTRICT OF COLUMBIA COLLEGE SAVINGS PROGRAM

155.1

Program Administration and Management: The Program shall be administered by the Chief Financial Officer in compliance with Section 529 of the Internal Revenue Code (including the regulations and administrative guidance thereunder), the D.C. Official Code, and this Regulation. The Program (and any trust established in connection therewith) shall be an instrumentality of the District of Columbia.

(a) Procedures and forms for use in the administration and management of the Program shall be subject to the approval of the Chief Financial Officer. Pursuant to its authority in §§ 47-4505(c) and 47-4506 of the D.C. Official Code, the Chief Financial Officer shall designate one or more program managers to assist or act on behalf of the Chief Financial Officer with respect to the administration and management of the Program. The Chief Financial Officer may create a trust Program, and shall serve, or, by a lawful written delegation order, appoint the Deputy Chief Financial Officer of the Office of Finance and Treasury and Treasurer of the District of Columbia, to serve, as trustee of any such trust. Any such trust shall be an instrumentality of the District of Columbia.

(b) The Chief Financial Officer may retain the services of consultants, administrators, and other personnel, as necessary, to administer the Program.

(c) The Chief Financial Officer may execute contracts and other necessary instruments, solicit and accept gifts, grants, loans or other aid from any source, impose and collect reasonable administrative fees for transactions involving the Program, procure insurance against a loss of Program assets, endorse insurance coverage written exclusively for the purpose of protecting an Account or its owner or Designated Beneficiary, designate terms under which money may be withdrawn from the Program, establish the methods by which the funds held in Accounts may be disbursed, establish additional procedural and substantive requirements for participation in, and the administration and promotion of, the Program, seek rulings and other guidance from the Internal Revenue Service and other federal agencies relating to the Program, and make changes to the Program required for the Participants in the Program to obtain the federal income tax benefits provided by § 529 of the Internal Revenue Code.

(d) The Chief Financial Officer shall solicit proposals from financial organizations to act as program manager(s) or account depository(ies). In selecting one or more financial organizations to serve as program manager or depository for the trust, the Chief Financial Officer shall consider the financial stability of the organization, the safety and suitability of the investment alternatives offered through the organization, the ability of the organization to satisfy applicable record-keeping and reporting requirements, the organization's plan for promoting the Program, the fees that the organization proposes to charge to Account Owners for opening new Accounts; the minimum initial deposit and minimum Contributions that the financial organization will require, the ability of the organization to accept electronic withdrawals, including payroll deduction plans, and other benefits to the District of Columbia or its residents.

(e) Any Program or investment management contract shall include terms requiring the financial organization to act at all times in a manner consistent with maintaining the Program as a Qualified Tuition Program; to keep adequate records of each Account, keep each account segregated from each other account, and to provide the Chief Financial Officer with the information necessary to prepare any required financial statements or reports; to compile information sufficient to provide periodic statements to Account Owners; if there is more than one program manager, provide the Chief Financial Officer with the information necessary to determine compliance with D.C. Code § 47-4503; to provide the Chief Financial Officer or his or her designee with access to its books and records to the extent needed to determine compliance with the contract; to hold all Accounts for the benefit of the Account Owner, to submit to an independent audit at least annually, to provide the Chief Financial Officer with copies of all regulatory filings and reports made by the financial organization during the term of the contract or while it is holding any Accounts, to ensure that any description of the Program is consistent with the marketing plan developed in conjunction with the Chief Financial Officer. The Program Manager shall provide an accounting to the Chief Financial Officer on a periodic basis, but no less frequently than annually.

(f) The Chief Financial Officer may provide that an audit may be conducted by a certified public accounting firm of the operations of the program managers or depository at any time that the Chief Financial Officer deems necessary or appropriate, but no less frequently than annually.

(g) At least biennially, the Chief Financial Officer shall review the performance of each program manager or depository that has been appointed, taking into account, among other considerations, the factors described in Section 155.1(d), above, and shall consider whether it would be in the best interest of the Program and its Participants and Designated Beneficiaries to solicit alternative proposals from other financial organizations.

(h) If the Chief Financial Officer terminates, or determines not to renew, the contract of any financial organization appointed as a program manager or depository, the financial organization shall not accept any new Accounts; however, additional Contributions may be made to existing Accounts until the Chief Financial Officer arranges for the transfer of such Accounts to another financial organization that is selected as a program manager or depository.

155.2

[Reserved].

155.3

The Application Process and Eligibility Criteria for the Program shall be as follows:

(a) A Designated Beneficiary may be any individual designated as such in a Participation Agreement.

(b) An Account Owner may be any Person (1) who submits to the Program Manager a completed Participation Agreement, a Social Security or taxpayer identification number and an address for each of the Account Owner and the Designated Beneficiary in the United States or U.S. Territory, and (2) who otherwise meets the qualifications set forth in federal law, District of Columbia law and regulations governing the Program. An Account Owner may not be an individual who has not reached the age of majority (18).

(c) A Scholarship Sponsor that establishes a Scholarship Account shall provide the valid Social Security numbers or taxpayer identification numbers and addresses in the United States or U.S. Territory of each Designated Beneficiary of the application Scholarship Account prior to or in connection with a request for a Distribution.

(d) To participate in the Program, a prospective Account Owner must submit a completed Participation Agreement with either an initial Contribution of an amount of $25 if paid by electronic funds transfer or check, or $15 if paid by payroll deduction to the Program Manager designated by the Chief Financial Officer pursuant to D.C. Official Code § 47-4506.

(e) The Chief Financial Officer shall provide, or shall cause to be provided, information to each Account Owner regarding the terms and conditions for opening and maintaining an Account, restrictions on the substitution of Designated Beneficiaries, identification of the persons entitled to terminate the Account, the terms and conditions under which money may be wholly or partially withdrawn from the Program, including charges and fees that may be imposed for withdrawal, the probable tax consequences associated with Contribution to, and Distributions from, the Accounts, and other terms, conditions and provisions that the Chief Financial Officer considers appropriate.

(f) The Participation Agreement will provide that the Account Owner (and any successor Account Owner) will retain ownership of payments made under the Program through the opening of an Account in the name of the Account Owner and for the benefit of the Designated Beneficiary designated by such Account Owner (or the successor Account Owner).

(g) The Program Manager may charge an enrollment fee, not to exceed $25, to an Account Owner who is not a resident of the District of Columbia to open an Account in the Program. The Program Manager shall be responsible for collecting such fee directly from the Account Owner.

(h) Only one Account Owner is permitted per Account; however, anyone can make Contributions to an Account. One or more Account Owners may establish separate Accounts for a single Designated Beneficiary.

(i) Only one Designated Beneficiary is permitted per Account, except that Scholarship Accounts may be established for the benefit of one or more present or future Designated Beneficiaries. Each Participation Agreement shall provide that the Participation Agreement may be canceled upon the terms and conditions set forth therein.

(j) The D.C. Official Code and any amendment to the D.C. Official Code and/or regulations promulgated by the Chief Financial Officer will automatically amend the Participation Agreements and be incorporated by reference in the Participation Agreements. Any provision contained in a Participation Agreement which is inconsistent with the D.C. Official Code or this Regulation shall automatically be amended to bring such inconsistent provision into conformity with the D.C. Official Code and/or this Regulation.

(k) An annual fee of $10 may be imposed on an Account Owner who is a resident of the District of Columbia for the maintenance of the Account. An annual account maintenance fee of $15 may be imposed on an Account Owner who is not a resident of the District of Columbia.

(l) An Account Owner may transfer ownership of an Account to another Person eligible to be an Account Owner under the provisions of the D.C. Official Code and this Regulation, and upon receipt of a request for change of Account Owner that satisfies the criteria set forth in this Subsection, the transferee shall be considered the Account Owner for all purposes related to the Program, regardless of the source of subsequent Contributions.

(i) General Rule. Any such change of Account ownership shall be effective provided that the transfer (A) is irrevocable, (B) transfers all ownership, reversionary rights, and powers of appointments (i.e., power to change Designated Beneficiaries and to direct Distributions from the Account), and (C) is submitted to the Program Manager on a change of Account Owner form in such form as the Chief Financial Officer may specify from time to time and completed by the Account Owner (or, in the event of the death of the Account Owner, by the personal representative of his or her estate). Such forms shall be available from the Program website or from the Office of the Chief Financial Officer or the Program Manager.

(ii) An Account Owner may transfer all or a portion of the balance of an Account to another Account under the Program or into another Qualified Tuition Program for the benefit of the Designated Beneficiary or a Member of the Family of the Designated Beneficiary in accordance with procedures established by the Chief Financial Officer. Transfer requests shall be submitted to the Program Manager in such form as the Chief Financial Officer may specify from time to time and completed by the Account Owner. Such forms shall be available from the Program website or from the Office of the Chief Financial Officer or the Program Manager. A transfer to another Qualified Tuition Program to the credit of the same Designated Beneficiary shall be treated as a Nonqualified Withdrawal described in Section 155.5(c) if the transfer occurs within 12 months from the date of a previous transfer.

(m) Designation of Contingent Account Owners. Any Account Owner that is an individual person may designate a contingent Account Owner for the Account, to become the owner of the Account automatically upon the death of such Account Owner. Prior to the initial action taken by the contingent Account Owner following the death of the deceased Account Owner, the contingent Account Owner shall provide a certified copy of a death certificate sufficiently identifying said deceased Account Owner by name and Social Security number or taxpayer identification number, or such other proof of death as is recognized under applicable law.

(n) An Account Owner may cancel a Participation Agreement at any time by submitting to the Program a notice to terminate the Participation Agreement in such form as the Chief Financial Officer may specify from time to time. Any Nonqualified Withdrawal distributed as a result of such cancellation shall be subject to an addition to the tax imposed under Section 529(c) (6) of the Internal Revenue Code for federal and District income tax purposes. In addition, a Nonqualified Withdrawal shall trigger the recapture of previous deduction(s) taken in the District of Columbia as described in Section 155.8(b).

155.4

All Contributions to Accounts shall be in Cash either by mail to the Program Manager, by electronic transfer, or by payroll deduction Contributions subsequent to the initial Contribution shall be made in an amount of at least $25 per investment option if made by check or electronic transfer, or at least $15 per investment option if made through an employer-offered payroll deduction program.

(a) The maximum amount which may be contributed (including earnings on Contributions) by an Account Owner with respect to a Designated Beneficiary may be established by the Chief Financial Officer, from time to time, but in no event shall be more than the maximum amount permitted for the Program to qualify as a "qualify tuition program" pursuant to Section 529 of the Internal Revenue Code. The current Contribution limit (including earnings on Contributions) for all Accounts established on behalf of a single Designated Beneficiary is $500,000. This limit does not apply to Scholarship Accounts.

(b) Contributions for any Designated Beneficiary shall be rejected to the extent the Contribution would cause the total Contributions (including earnings on Contributions) to the Account, together with all Contributions to other Accounts established under the Program for the benefit of the same Designated Beneficiary, to exceed the maximum amount established by the Chief Financial Officer. A Contribution that exceeds the Contribution limit must be promptly withdrawn in a Nonqualified Withdrawal or transferred to another Account.

(c) To the extent such change would not cause the balance in an Account for the new Designated Beneficiary to exceed the Account Balance Limited on Contribution (including earnings on Contributions), an Account Owner may change the Designated Beneficiary designated for an Account to any Member of the Family of the current Designated Beneficiary at any time, without penalty, by submitting a completed change of Designated Beneficiary form to the Program Manager in such form as the Chief Financial Officer may specify from time to time. Such forms may be obtained from the Program website or the Office of the Chief Financial Officer or the Program Manager. Any change of Designated Beneficiary by an Account Owner to a person who is not a Member of the Family of the current Designated Beneficiary shall be a Nonqualified Withdrawal subject to the additional tax described in Section 529(c)(6) of the Internal Revenue Code.

(d) To the extent such change would not cause the balance in an Account for the new Designated Beneficiary to exceed the Account Balance Limit on Contribution (including earnings on Contributions), an Account Owner may transfer, in a Rollover Distribution, all or part of the Account Balance (1) to an Account or an account in another Qualified Tuition Program for another Designated Beneficiary who is a Member of the Family of the current Designated Beneficiary or (2) no more than once in any 12-month period, to an account in another Qualified Tuition Program for the same Designated Beneficiary, by submitting a completed request for transfer of Account funds in such form as Chief Financial Officer may specify from time to time. Such forms may be obtained from the Program website or the office of the Chief Financial Officer or the Program Manager.

(e) Separate Accounting. The Program, through the Program Manager, shall provide separate accounting (as provided in Section 529 of the Internal Revenue Code) for each Designated Beneficiary and for each Account.

155.5

Payment of Benefits and Withdrawals shall occur as follows:

(a) An Account Owner may request a Qualified Withdrawal from the Account upon thirty (30) days notice or such shorter period as may be authorized by the Chief Financial Officer by submitting a completed request for Qualified Withdrawal to the Program in such form as the Chief Financial Officer may specify from time to time.

(b) An Account Owner may request a Withdrawal Due to the Death or Disability of, or Scholarship to, a Designated Beneficiary from the Account by submitting a completed request to the Program in such form as the Chief Financial Officer may specify from time to time. Such forms shall be available from the Program website or from the Office of the Chief Financial Officer or Program Manager.

(c) An Account Owner may request a Nonqualified Withdrawal by submitting a completed request form to the Program Manager in such form as the Chief Financial Officer may specify from time to time. Such forms shall be available from the Program website or from the Office of the Chief Financial Officer or Program Manager. Any such Nonqualified Withdrawal shall be subject to the additional federal tax of 10% of Account earnings that is described in Section 529(c)(6) of the Internal Revenue Code.

(d) No distributions may be made within thirty (30) days of receipt by the Program Manager of a completed change of Account Owner form or request to change the mailing address of the Account Owner, unless the current Account Owner's signature is guaranteed on the request. Signature guarantee shall be provided through notarization or other procedure approved by the Program Manager. No Contribution may be withdrawn for 10 days after receipt thereof by the Program.

(e) An Account Owner or Designated Beneficiary may not pledge, transfer, or use any Account or other interest in the Program or any portion thereof as security for a loan, nor shall they be permitted to borrow any assets of an Account for any reason.

(f) An Account Owner may change the Designated Beneficiary of an Account in accordance with procedures established by the Chief Financial Officer. Any change in the Designated Beneficiary of an Account shall not be treated as a withdrawal if the new Designated Beneficiary is a Member of the Family of the former Designated Beneficiary.

(g) If there is a Distribution from an Account to an individual or for the benefit of an individual during a calendar year, the Distribution shall be reported to the Internal Revenue Service by the distributee to the extent required by Section 529(c)(3) of the Internal Revenue Code. The Program, through the Program Manager, shall provide the distributee with a 1099Q. The distributee of a Nonqualified Withdrawal will be required to include such nonqualified portion of the Distribution that is attributable to earnings on Contributions (plus Contributions previously deducted) in his or her gross income for purposes of the federal tax return and D.C. tax return, in the case such distributee is a D.C. resident, filed by the distributee.

(h) Statements shall be provided to each Account Owner on a periodic basis, but at least once each year within 60 days after the end of the 12-month period to which they relate. The statement shall identify the Contributions made during a preceding 12-month period, the total Contributions made to the Account through the end of the period, the value of the Account at the end of the period, Distributions made during the period, and any other information that the Chief Financial Officer shall require to be reported to the Account Owner. Statements and information relating to Accounts shall be prepared and filed to the extent required by federal and state tax law.

155.6

Investments under the Program shall occur pursuant to the following rules:

(a) The Chief Financial Officer (and any investment manager appointed by the Chief Financial Officer) shall invest the funds on deposit in the Program, together with any income thereon, in a manner that is reasonable and appropriate to achieve the objectives of the Program. In accordance with the investment policy statement and the D.C. Official Code, the Chief Financial Officer may invest funds received pursuant to the Program. Any such investment shall be made solely in the interest of the Account Owners and Designated Beneficiaries and for the exclusive purposes of providing benefits to Designated Beneficiaries for Qualified Higher Education Expenses and defraying reasonable expenses of administering and managing the Program.

(b) The Chief Financial Officer may appoint one or more investment managers (who may also be a program manager) to act on behalf of the Chief Financial Officer in the investment or reinvestment of all or part of the funds, including holding, purchasing, selling, assigning, transferring or disposing of any or all of the securities and investments in which such funds shall have been invested. Such investment manager shall be registered as an investment advisor with the United States Securities and Exchange Commission, unless exempt from registration.

(c) The Chief Financial Officer shall preserve, invest, and expend the assets of the Program solely for the purposes of the District of Columbia College Savings Act, as amended from time to time. The Chief Financial Officer shall not loan, transfer, or use the assets of the Program for any other purpose.

(d) An Account Owner or Designated Beneficiary may not directly or indirectly direct the investment of any Contributions or Earnings of the Program. This restriction shall be interpreted in accordance with applicable guidance under §529 of the Internal Revenue Code, including IRS Notice 2001-55. In general, IRS Notice 2001-55 permits an Account Owner to change investment strategies for an Account twice per calendar year or upon a change of Designated Beneficiary.

(e) Nothing in this Regulation shall create, or be construed to create, an obligation or guarantee of the District of Columbia, its agencies or instrumentalities, including without limitation any trust established by the Chief Financial Officer pursuant to Section 155.1(a) above, the Chief Financial Officer or any of his or her authorized delegates, including, without limitation, the selection of the Program Manager, or the trustee of any trust established pursuant to Section 155.1(a), for the benefit of an Account Owner or Designated Beneficiary with respect to (1) Contributions; (2) the rate of interest or other return on an Account; or (3) the payment of interest or other return on an Account.

155.7

An Administrative Fund for the Program will be set up under the following rules:

(a) Pursuant to the authority in the D.C. Official Code § 47-4503(c), § 47-4503(r), § 47-4505(b), § 47-4505(c)(5), and § 47-4506(b)(9), the Chief Financial Officer shall create an Administrative Fund to be used to pay the reasonable expenses of administering and managing the Program as permitted under applicable law, including expenses for legal, actuarial, accounting, advisory, consulting and other administrative and financial management services.

(b) All monies received by the Program other than Contributions from Account Owners (and earnings thereon) shall be deposited in the Administrative Fund, which shall be assets of the Trust and shall be considered part of the Trust. The assets of the Administrative Fund shall be deposited in money market fund or similar fund, as the Chief Financial Officer shall deem appropriate. All earnings on deposits in the Administrative Fund shall be credited to the Administrative Fund.

(c) The program manager, on behalf of the Program, may withdraw each month a fee of up to .025% (on an annualized basis) of the average daily net assets of the Program to pay for the administration and management of the Program, and shall deposit the amount of such fee in excess of those that it is authorized to retain pursuant to the agreement between the Program Manager and the Chief Financial Officer in the Administrative Fund.

(d) The Program may apply for, accept and expend gifts, grants, or donations from public or private sources to enable the Program to carry out its objectives. These funds shall be deposited in the Administrative Fund, and shall be expended only for the purposes for which they were received.

(e) No funds shall be withdrawn, and no expenses shall be paid from the Administrative Fund except to meet the purposes of the Program. All expenditures from the Administrative Fund shall require the written approval of the Deputy Chief Financial Officer of the Office of Finance and Treasury and Treasurer of the District of Columbia, Associate Treasurer or Program Administrator. All withdrawals from the Administrative Fund shall require the written approval of (i) the Deputy Chief Financial Officer of the Office of Finance and Treasury and Treasurer of the District of Columbia, Associate Treasurer, or the Program Administrator, and (ii) an authorized official of the Program Manager.

(f) The Administrative Fund shall be held, accounted for and disbursed separately from other Trust assets. The Chief Financial Officer or his or her designee, or the Program Manager, shall cause the Administrative Fund to be audited by a certified public accounting firm on a periodic basis, but no less frequently than annually, and shall provide an accounting to the Chief Financial Officer, the D.C. Council and the Advisory Board.

155.8

An Account Owner who files an income tax return in the District of Columbia may claim a deduction in an annual amount not to exceed $4,000 for Contributions made to all Accounts under the Program (provided that such Contribution does not cause the Account to exceed the limitation in Section 155.4(a)). With respect to married couples filing jointly, each spouse may subtract up to $4,000 annually for Contributions made to all Accounts under the Program for which that spouse is the Account Owner. A Rollover Distribution shall not be treated as a Contribution for purposes of this deduction.

(a) If an amount greater than $4,000 is contributed to one or more Accounts in any one tax year, the excess may be carried forward as a deduction, subject to the annual limit, in subsequent tax years within five years.

(b) Any deduction taken hereunder shall be subject to recapture with respect to a withdrawal or rollover taken within 2 years of the establishment of the Account for any reason other than the payment of Qualified Higher Education Expenses, Withdrawals Due to Death or Disability of, or Scholarship to, a Designated Beneficiary (except that only the amount of the scholarship is exempt from recapture), or the funds are transferred to another account under the "Rollover Distribution" provisions in 155.99. To implement the recapture, the Account Owner shall be required to add to his or her income an amount equal to the previous deduction(s) taken for Contributions to the income reported for the year in which the withdrawal or rollover is made.

(c) For District income tax return purposes, a part-year resident of the District of Columbia is allowed a deduction for contributions made to the District 529 Program only during the period of residency in the District of Columbia.

155.9

Distributions under the Program will be treated as follows for District tax Purposes:

(a) Qualified Withdrawals shall be exempt from District of Columbia income taxation.

(b) That portion of any Nonqualified Withdrawal that is attributable to Account Earnings shall be subject to District of Columbia income taxation in the year in which the withdrawal is made.

155.10

The provisions of Section 529 of the Internal Revenue Code, Treasury regulations (or final regulations), and administrative guidance promulgated thereunder, each as amended from time to time, are incorporated herein by reference with the same effect as if fully set forth herein. If any provision of this regulation, or the application of it to any person or circumstance, is determined to be invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions of this regulation which can be given effect without the invalid provision or application, and to that end, the provisions of this regulation are severable.

155.11 - 155.98

[Reserved]

155.99

Definitions.

For purposes of this section, the following terms and phrases shall have the meanings ascribed to them below.

"Account" means a college savings account established under § 474503.

"Account Balance" means the aggregate Program unit values of an Account on a particular date.

"Account Owner" means the individual who enters into a college savings agreement under this chapter establishing an Account. The Account Owner may also be the Designated Beneficiary of the Account.

"Cash" shall include, but not be limited to checks drawn on a banking institution located in the United States in U.S. dollars (other than cashier checks, travelers checks or third-party checks exceeding $10,000), payroll deduction, and electronic funds transfer. Cash does not include property.

"Contribution" means a Cash contribution to an Account, but shall not include amounts added to an Account through a Rollover Distribution.

"D.C. Official Code" means the Official Code of the District of Columbia.

"Designated Beneficiary" means an individual who is:

(1) the individual designated at the commencement of participation in the Program as the beneficiary of amounts paid (or to be paid) to the Program;

(2) in the case of a change in Designated Beneficiaries, the individual who is the new beneficiary; or

(3) in the case of an interest in a qualified tuition program purchased by a State or local government (or agency or instrumentality thereof) or an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from taxation under section 501(a) of the Internal Revenue Code as part of a scholarship program operated by such government or organization, the individual receiving such interest as a scholarship.

"Disability" means, with respect to a Designated Beneficiary, any condition that causes such Designated Beneficiary to be "disabled" within the meaning of Section 530(d)(4)(B)(ii) of the Internal Revenue Code.

"Eligible Institution" has the same meaning as "eligible educational institution" in section 529(e)(5) of the Internal Revenue Code, and generally means K-12 education, accredited post-secondary educational institution offering credit towards a bachelor's degree, and associate's degree, a graduate level or professional degree, or another recognized post-secondary credential. Certain proprietary institutions, apprenticeships and post-secondary vocational institutions and certain institutions located in foreign countries are also eligible institutions. To be an eligible institution, the institution must be eligible to participate in the U.S. Department of Education student aid programs.

"Internal Revenue Code" means the Internal Revenue Code of 1986, approved October 22, 1986 (100 Stat. 2085; 26 U.S.C. § 1 et seq.), as amended from time to time.

"Member of the Family " means, with respect to any Designated Beneficiary;

(A) the spouse of such Designated Beneficiary;

(B) a son or daughter of the Designated Beneficiary, or a descendent or either;

(C) a stepson or stepdaughter of the Designated Beneficiary;

(D) a brother, sister, stepbrother, stepsister of the Designated Beneficiary;

(E) the father or mother of the Designated Beneficiary, or an ancestor of either;

(F) a stepfather or stepmother of the Designated Beneficiary;

(G) a son or daughter of a brother or sister of the Designated Beneficiary;

(H) a brother or sister of the father or mother of the Designated Beneficiary;

(I) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother- in-law, or sister-in-law of the Designated Beneficiary;

(J) the spouse of any individual described in subparagraphs (B) through (I); and

(K) any first cousin of such Designated Beneficiary.

"Nonqualified withdrawal" means a withdrawal from an Account:

(A) Other than a qualified withdrawal;

(B) Made as the result of the death or disability of the Designated Beneficiary of an Account; or

(C) Made on account of a scholarship.

"501(c)(3) Organization" means an organization described in Section 501(c)(3) of the Internal Revenue Code and exempt from taxation under Section 501(a) of the Internal Revenue Code.

"Participation Agreement" means a college savings agreement as defined in the D.C. Official Code, which serves as an application for participation in the Program submitted by a prospective Account Owner to the Program Manager designated by the Chief Financial Officer.

"Participant" means as Account Owner.

"Person" means any individual, estate, association, unincorporated organization, trust, custodian or guardian, partnership, limited liability company corporation, the District of Columbia or any department thereof, or any political subdivision of the District of Columbia.

"Program" means the District of Columbia College Savings Program established under § 47-4502.

"Program Administrator " means the Program Director for the 529 D.C. College Savings Program.

"Program Manager" means the person selected by the Chief Financial Officer to administer the Program. The current Program Manager is Ascensus College Savings.

"Qualified Higher Education Expenses" means:

(A) Tuition, fees, and the costs of books, supplies, and equipment required for enrollment or attendance of a qualified Designated Beneficiary at an Eligible Institution; or

(B) Certain costs of the room and board of a Designated Beneficiary for any academic period during which the student is enrolled at least half-time at an Eligible Institution;

(C) In the case of a Designated Beneficiary with special needs, expenses for special needs services which are incurred in connection with their enrollment or attendance at an Eligible Institution; and

(D) Expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B) of the Internal Revenue Code), computer software (as defined in section 197(e)(3)(B) of the Internal Revenue Code), or Internet access and related services, if such equipment, software, or services are to be used primarily by the Designated Beneficiary during any of the years the Designated Beneficiary is enrolled at an Eligible Institution.

"Qualified Tuition Program" means a program established and maintained by a State or agency or instrumentality thereof or by one or more eligible education institutions under which a person may prepay tuition or make contributions to a savings account established for the purpose of meeting the Qualified Higher Education Expenses of the Designated Beneficiary of the Account and which meets the requirements of Section 529 of the Internal Revenue Code.

"Qualified Withdrawal" means a withdrawal from an Account to pay the qualified higher education expenses of the Designated Beneficiary of the Account.

"Rollover Distribution" means (A) a transfer of funds withdrawn from one Account and deposited to another Account within 60 days of the withdrawal, (B) a transfer of funds from another Qualified Tuition Program to an Account within 60 days of withdrawal of the funds, (C) a transfer of funds to another Qualified Tuition Program from an Account within 60 days of withdrawal of the funds, in each case to the extent permitted as a rollover Distribution under Section 529(c)(3)(C) of the Internal Revenue Code, or (D) a transfer of funds withdrawn from one Account and deposited to a Qualified ABLE Account, as defined in D.C. Official Code § 47-4901(1) within 60 days of the withdrawal of the funds. The transfer must either be made for the benefit of a new Designated Beneficiary who is a Member of the Family of the prior Designated Beneficiary, or, with respect to (B), (C), and (D), for the benefit of the same Designated Beneficiary provided that no other such transfer for the benefit of such Designated Beneficiary has been made within the previous 12 months.

"Scholarship" means any scholarship and any allowance or payment described in Section 530(d)(4)(B)(iii) of the Internal Revenue Code.

"Scholarship Account" means an Account in the Program established by an Account Owner that is a Scholarship Sponsor and maintained for the benefit of one or more current and/or future Designated Beneficiaries.

"Scholarship Sponsor" means the District of Columbia, or an agency or instrumentality of the District of Columbia, or a Section 501(c)(3) Organization, in each case who establishes one or more Accounts as part of a scholarship Program:

"Trust" means the trust established by the Chief Financial Officer with one or more depositories to hold the assets of the Program, other than the Administrative Fund.

"Withdrawal Due to Death or Disability of, or Scholarship to, a Designated Beneficiary" means a Distribution from an Account established under the Program (A) made because of the death or Disability of the Designated Beneficiary, or (B) made because of the receipt of a Scholarship by the Designated Beneficiary to the extent that such Distribution does not exceed the amount of such Scholarship.

D.C. Mun. Regs. tit. 9, r. 9-155

Final Rulemaking published at 51 DCR 739 (January 16, 2004); amended by Final Rulemaking published at 68 DCR 13108 (12/10/2021)