Section 1700-05-03-.08 - CONTRIBUTIONS AND WITHDRAWALS(1) Contributions. (a) Purchaser contributions to the Matching grant incentive program shall be made in accordance with Rule1700-05-04-.04 by those Purchasers who qualify for participation in the program for a Beneficiary or Beneficiaries. Purchaser contributions will be subject to the limitations established in Rule 1700-05-04-.04.(b) Matching contributions shall be made by the Board for each Beneficiary Account established by a Purchaser but shall be maintained in an account separate from the account that contains the Purchaser's contributions.(2) Withdrawals. (a) Eligibility. Once a Beneficiary has been accepted for enrollment in an Eligible educational institution the Purchaser may begin using funds, including Purchaser contributions and Matching contributions, on deposit in the Account for the payment of Qualified higher education expenses of the Beneficiary by requesting a Withdrawal of funds. Funds shall not be deemed on deposit in the Account until the fifteenth (15th) day following receipt of the respective funds from the Board. If the Purchaser desires the Board to send payment directly to the Eligible educational institution where the Beneficiary is enrolled, the notification must include the name and address of the institution, the amount of funds needed to pay the Qualified higher education expenses and supporting documentation showing the Qualified higher education expenses to be paid. Failure to provide sufficient notice prior to the start of the Academic term in which the funds would be used may result in an untimely payment being made to the institution.(b) Written Request. Any Withdrawal requests must be made in writing by the Purchaser or through other means acceptable to the Board, including electronic means.(c) Amount and Timing of Withdrawal. Subject to any limitations on Withdrawals contained in these rules, the Withdrawal amount will equal the amount requested, not to exceed the Redemption value of the Beneficiary's Account at the time the Withdrawal is processed. The Withdrawal amount will be paid within sixty (60) calendar days of receipt by the Board of the request required by subparagraph (2)(b).(d) Withdrawals for Qualified Higher Education Expenses. The Purchaser may use either Purchaser contributions or the Matching contributions to pay for Qualified higher education expenses by directing payment to the Purchaser, the Beneficiary or an Eligible educational institution as an advance payment or as reimbursement for Qualified higher education expenses. Third party documentation to substantiate the request shall not be required unless otherwise provided for in § 529 of the Internal Revenue Code or the regulations promulgated thereunder.(e) Withdrawals for Non-Qualified Higher Education Expenses. The Purchaser may only use Purchaser contributions, and not Matching contributions, to pay for non-Qualified higher education expenses, provided that the Purchaser contributions have been on deposit in the Account for at least fifteen (15) calendar days and provided that there is at least one hundred dollars ($100.00) remaining in the Account from Purchaser contributions once the withdrawal is made. Such a Withdrawal may be made without causing termination of the Contract and without requiring the Purchaser to establish that the withdrawal of the Purchaser contributions will be used for Qualified higher education expenses. The earnings portion of withdrawals made for non-Qualified higher education expenses could be subject to federal taxation as prescribed under the sections of the Internal Revenue Code and the regulations promulgated thereunder that are applicable to the program.(f) Scholarship Refund. If a Beneficiary is the recipient of a scholarship, allowance or payment described in § 25A(g)(2) of the Internal Revenue Code that the Board determines cannot be converted into money by the Beneficiary, the Purchaser may request a withdrawal of all or a portion of the Purchaser contributions; however, the Matching contributions will be refunded back to the Board. The Purchaser must furnish information about the scholarship, allowance or payment to the Board. If the scholarship, allowance or payment has a duration that extends beyond one (1) Academic term, the Purchaser may request a refund in advance of the scholarship payment. The amount of the refund payable to the Purchaser will be equal to the Redemption value of the Account that is not needed to cover the future Qualified higher education expenses on account of the scholarship, allowance or payment minus any applicable fee(s) charged by the Board and the Matching contributions.(g) Contract Termination and Refund. Except as provided in subparagraph (2)(c) of this rule, a Contract may not be terminated by a Purchaser for any reason except one (1) of the following circumstances: (i) the Beneficiary has died or suffers from a Permanent disability; (ii) the Beneficiary is age eighteen (18) or older and has decided not to attend an Eligible educational institution; (iii) the Beneficiary has completed the requirements for a degree that is less than a bachelor's degree at an Eligible educational institution and the Beneficiary does not plan to pursue further education; (iv) the Beneficiary has completed the bachelor's degree requirements at an Eligible educational institution; or (v) the Redemption value of the Account equals one hundred dollars ($100.00) or less and no contributions have been deposited to the Account for a period of at least fifteen (15) consecutive days. The Contract termination request must be accompanied by documentation acceptable to the Board to substantiate the reason for the Contract termination. In the event that a Contract is terminated due to the Permanent disability or death of the Beneficiary, the amount of the refund paid to the Purchaser shall be equal to the Redemption value of the Account at the time the refund is made minus the Matching contributions, which will revert back to the Board. In the event that the Contract is terminated under any of the conditions described in items (ii) - (v) above, the amount of the refund paid to the Purchaser shall be equal to the Redemption value of the Account at the time the refund is made minus the Matching contributions and any applicable fee charged by the Board. The actual termination of the Contract will not occur until all funds in the Account have been refunded.(h) Rollovers Out of the Program. The Purchaser may rollover all or a portion of the Purchaser contributions in the Account to an account established for another Beneficiary under the qualified tuition program established under § 529 of the Internal Revenue Code by making a rollover request to the Board on such forms as may be prescribed by the Board. If the rollover is for the benefit of another Beneficiary, the Beneficiary to whose Account the funds are being transferred must be a Member of the family of the original Beneficiary. Any rollover under this Rule shall be administered in accordance with the applicable rollover provisions of the Internal Revenue Code. Any rollover made under this paragraph shall be equal to the amount requested, not to exceed the Redemption value of the Account plus Matching contributions, but minus any applicable fees charged by the Board. The Redemption value of the Account shall be determined as of the date the rollover is made. The rollover of the Matching contributions shall be subject to the limitations contained in Rule 1700-05-03-.06.Tenn. Comp. R. & Regs. 1700-05-03-.08
Original rule filed October 1, 2010; effective March 31, 2011. Repeal and new rule filed April 11, 2014; effective 9/28/2014.Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. § 49-7-808(d), § 49-7-805, § 49-7-811, § 49-7-812 and § 65-5-113(c).