80-001 Code Vt. R. 80-270-001-X
The purpose of this regulation is to establish procedures for the operation of the Vermont Higher Education Investment Plan (the "Investment Plan"), specify the responsibilities of the Vermont Student Assistance Corporation (VSAC) in administering the Investment Plan, describe the rights and responsibilities of contributors to the Investment Plan and ensure that the Investment Plan conforms with the federal and state statutes and regulations governing qualified state tuition programs.
This regulation is issued pursuant to authority vested in VSAC by 16 VSA Chapter 87, subchapter 7 (as amended, the "Enabling Act"), designating it as the administrator of the Investment Plan. In addition, VSAC, as an instrumentality of the state, assumes the authority, functions and responsibilities of a qualified state tuition plan under Section 529 of the Internal Revenue Code (the "Code"), as amended.
This regulation affects the responsibilities of the Board of Directors of VSAC and its staff, any individual who is a Participant in or Beneficiary of the Investment Plan and any third party designated by VSAC to carry out services under the Investment Plan.
Terms defined herein shall be interpreted and construed to be compatible with the definitions governing the operation of qualified state tuition plans under the Code, as amended. Any terms not explicitly defined herein shall have the meanings assigned by the Code.
"Account" means each separate account established as described in the Enabling Act and this regulation.
"Beneficiary" means any individual designated by a Participation Agreement to receive the benefits thereof.
"Benefits" means the payment of Qualified Post-Secondary Education Costs on behalf of a Beneficiary by the Investment Plan.
"Board" means the Board of Directors of the Vermont Student Assistance Corporation.
"Contribution" shall have the meaning established in § 529 of the Internal Revenue Code.
"Corporation" or "VSAC" means Vermont Student Assistance Corporation.
"Distribution" means any disbursement from the Investment Plan. Distributions include, but are not limited to, tuition credits or certificates, payment vouchers, tuition waivers or other similar items. Distributions also include, but are not limited to, a refund to the account owner, the Beneficiary or the Beneficiary's estate.
"Eligible institution of post-secondary education" means an institution so defined by the Internal Revenue Code.
"Internal Revenue Code" or the "Code" means the federal Internal Revenue Code of 1986, as amended, together with regulations promulgated thereunder.
Parti cipant" means a person, as defined in 1 V.S.A. § 128, who has entered into a Participation Agreement with the Corporation under the Investment Plan for the advance payment of Qualified Post-Secondary Education Costs on behalf of a Beneficiary. "Participation Agreement" means an agreement between a Participant and the Corporation, pursuant to and conforming with the requirements of the Enabling Act, these regulations, the Code and other federal statutes, detailing the terms and conditions, in easily understandable terms, of participation in the Investment Plan.
"Qualified Post-Secondary Education Costs" means the qualified costs of a postsecondary education as defined in the Code.
"Vermont Higher Education Investment Plan" or "Investment Plan" means the program created pursuant to the Enabling Act and these regulations.
The Board shall establish procedures, which conform with the Code, to further implement the Enabling Act and these regulations. Those procedures shall govern the operation and management of the Investment Plan by the VSAC staff and also the investment of Participant contributions. All procedures are to be available for public review and examination by the Investment Plan Participants. The Board shall insure that the actions it takes regarding the Investment Plan, and those taken by the VSAC staff, shall be in the best interests of the Investment Plan's Participants. Furthermore, the Board shall require a separate accounting for each Beneficiary and shall annually establish a limitation on the total assets that can be held in a Beneficiary's account(s) for the payment of necessary Qualified Post-Secondary Education Costs.
Parti cipation Agreements shall specify the rights and responsibilities of the Investment Plan Participants, Beneficiaries and VSAC. They shall be written, presented and organized in such a way as to be easily understandable to the general public as required by the Enabling Act. The Participation Agreement shall stipulate the terms and conditions under which deposits can be made in and disbursements can be made from the Investment Plan and fully disclose the penalty for the withdrawal of deposits for non-qualified purposes. The Participation Agreement also shall clearly and prominently disclose any risks associated with depositing monies with the Corporation and any insurance provided by the Corporation. The Participation Agreement shall state that no interest in the Investment Plan or any portion thereof shall be used as security for a loan. All Participation Agreements shall conform to the requirements of Vermont law and the Code.
The Board shall offer at least two different investment options from which prospective Participants can choose at the time of their enrollment in the Investment Plan. The options shall be clearly described to all persons considering participation in the Investment Plan. The benefits and risks of each option of the Investment Plan are to be explained in the Participation Agreement, prior to enrollment. Other than selecting one or more investment options at enrollment, Participants shall not self-direct the investment of their funds in the Investment Plan except in accordance with the Code.
Any person is eligible to become a Participant, regardless of place of residence.
Income earned or received from the Investment Plan for the account of any Participant or Beneficiary shall not be subject to Vermont income tax to the extent that the assets and income of the account are maintained, accrued and expended in accordance with the requirements of the Investment Plan, the Enabling Act and the applicable provisions of the Code.
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.
This regulation shall be effective August 15, 2001.
80-001 Code Vt. R. 80-270-001-X
AMENDED: August 22, 2001 (Secretary of State Rule Log # 01-50)
AUTHORITY: 16 V.S.A. Chapter 87 SubC. 7