18.
“Qualified tuition program" means a savings program to help defray the cost of college expenses under section
529 of the internal revenue code
.
19. “Rollover contribution" means the transfer of all or part of an account from one qualified tuition program account to another qualified tuition program account.
Treas 1.03 Account owner eligibility. Any person legally able to contract under applicable state law is eligible to establish an account for the benefit of a designated individual. There shall be only one account owner per account.
Treas 1.04 Opening an account. (1) To open an account, an applicant shall submit a properly completed and signed application, which incorporates the program description and participation agreement, to the program manager. A contribution may be made as provided in Treas 1.09 or by any alternate method established by the board or the program manager.
(2) An applicant must select an available investment option in which all contributions to the account shall be invested. After an account has been opened, the investment option selected may only be changed as permitted under section
529 of the internal revenue code and any regulations issued thereunder.
(3) The participation agreement shall be accompanied by a program description disclosing the program characteristics, including the investment options, investment risks, program fees, and other information as determined by the board and the program manager.
(4) Acceptance by the program manager of application materials, the initial contribution, or selection of contribution method for processing shall not be deemed an agreement to open an account.
(5) The program manager shall accept applications to open accounts and accept subsequent contributions for a designated beneficiary in the order they are received, up to the maximum contribution limit.
Treas 1.05 Refusal to open an account. The program manager or the board may refuse to open an account for the following reasons:
(1)
The applicant is not an eligible account owner.
(2)
The applicant has not provided all of the information required in the application.
(3)
The maximum contribution level for the designated beneficiary will be exceeded.
(4)
The execution of a participation agreement violates any federal or state law.
(5)
The board determines that the number of accounts in the program should be limited.
Treas 1.06 Change of account ownership. An account owner may designate a successor who shall become the new account owner automatically upon his or her death. This designation may be made at any time by submitting a written designation of the successor to the program manager containing the information required by the program manager and the board. Designation of a successor shall be effective upon registration in the records of the program manager.
(1) If a change in the ownership of an account is required by a court order directing such change, or by an affidavit or declaration that is recognized under applicable law as requiring transfer of ownership upon death without a court order, such change shall be effective upon receipt by the program manager unless otherwise required by law.
(2) Any other request to transfer ownership to a new account owner must be made by submitting to the program manager a written designation of a new account owner containing the information required by the program manager and the board. Transfer of ownership shall not be effective until registered in the records of the program manager.
Treas 1.07 Designated beneficiary. Any individual regardless of age or relationship to the account owner, including the account owner, may be a designated beneficiary under the program. There shall be only one designated beneficiary per account. Subject to the maximum contribution level, any number of accounts may be opened for a single designated beneficiary.
Treas 1.08 Change of designated beneficiary. (1) Only an account owner may change the designated beneficiary of an account. The designated beneficiary may only be changed to a member of the family of that designated beneficiary.
(2) To change a designated beneficiary, the account owner must submit a written request to the program manager containing all the information required by the program manager and the board.
(3) Upon receipt of the written request, the program manager shall register the information regarding the newly designated beneficiary in the records of the program. The change of the designated beneficiary shall be effective upon registration.
Treas 1.09 Contributions. Any person may make a contribution to an account of a designated beneficiary. Contributions shall be made only in cash.
(1) MAXIMUM CONTRIBUTION LIMIT. Contributions to the accounts established for a designated beneficiary shall not, in the aggregate, exceed that amount necessary to provide for the qualified higher education expenses of the designated beneficiary. The board shall establish from time to time the maximum amount that may be contributed in the aggregate to the accounts of an individual designated beneficiary. Contributions in excess of that limit shall not be accepted and shall be returned to the contributor.
(2) MINIMUM CONTRIBUTION LIMIT. The minimum amount contributed at the time an account is opened under Treas 1.04, and the minimum amount of any additional contribution to be made to an account shall be established from time to time by the board.
(3) ROLLOVER CONTRIBUTIONS. If rollover distributions are allowed by another state's qualified tuition program, an account owner may deposit all or part of the funds from an account in that state's qualified tuition program to a new account in the program as provided under section
529 of the internal revenue code, and any regulations issued thereunder. When making a rollover contribution, the account owner shall complete the forms and make such disclosures of financial information as required by the program manager and the board. If the rollover distribution deposited in the program account would cause the total account balance of all accounts for that designated beneficiary to exceed the maximum contribution limit, the excess funds shall be refused.
(4) INVESTMENT DIRECTION PROHIBITION. Except as permitted under section
529 of the internal revenue code and any regulations issued thereunder, no person contributing to an account may direct the investment or investment earnings of any contribution of an account.
Treas 1.10 Separate Accounting. Separate records and accounting shall be maintained for each account established under the program. Reports shall be issued to each account owner at least annually.
Treas 1.11 General Distributions. (1) CALCULATING EARNINGS ON MULTIPLE ACCOUNTS. If an individual is a designated beneficiary of more than one account, contributions and earnings with respect to those accounts shall be treated as directed under section
529 of the internal revenue code for purposes of calculating the earnings portions of any distribution with respect to that designated beneficiary.
(2) DISTRIBUTION REQUESTS. An account owner may request a distribution of funds by submitting to the program manager at least three business days prior to the date of the requested distribution a completed distribution request form and all other information as may be required by the program manager and the board. Upon receipt, the program manager shall commence processing properly completed distribution request forms as soon as practicable. Distributions shall be subject to any applicable state and federal tax withholdings.
(3) A designated beneficiary shall not authorize distribution or withdrawal of account funds.
(4) NONQUALIFIED DISTRIBUTION. A distribution of funds from an account for any use other than qualified higher education expenses for the designated beneficiary constitutes a nonqualified distribution and may be subject to the additional tax imposed by section
529(c)(6) of the internal revenue code.
(5) QUALIFIED DISTRIBUTION. A distribution of funds to pay for the qualified higher education expenses of a designated beneficiary constitutes a qualified distribution. An account owner may request a qualified distribution by submitting a properly completed distribution request form, and all documentary evidence necessary to verify the claimed qualified higher education expenses, as determined by the program manager and the board, to the program manager.
Treas 1.12 Distributions Due to Death, Disability or Scholarship of Beneficiary. (1) Prior to a distribution from an account due to the death or disability of the designated beneficiary, or because the beneficiary has received a scholarship to be applied toward attendance at an eligible education institution, the program manager may require either of the following:
(a) Certification by the account owner that the distribution is due to the death or disability of the designated beneficiary or because the designated beneficiary has received a scholarship. The program manager may withhold and reserve as a penalty a portion of the distribution made as a result of such distribution request until the program manager receives written confirmation from an appropriate authority.
(b) Written confirmation from an appropriate authority that the designated beneficiary has died, become disabled, or received a scholarship in the amount of the requested distribution.
(2) A penalty-free distribution due to the death or disability of a beneficiary may be for an amount up to the total account balance for all accounts for that designated beneficiary. A penalty-free distribution due to a scholarship awarded to a designated beneficiary may be for an amount up to the total scholarship award.
Treas 1.13 Refund of qualified distribution payment. An eligible educational institution that owes a full or partial refund of a qualified distribution due to an overpayment of educational expenses shall pay the refund directly to the program manager for credit to the applicable designated beneficiary's account. A refund may not be paid directly to the designated beneficiary or account owner.
Treas 1.14 Account termination. (1) The board shall determine the conditions under which an account may be terminated, including but not limited to the following:
(a)
the account balance is below an established minimum.
(b)
The account is inactive for an established amount of time.
(c)
Any portion of the account remains unused 10 years after the anticipated academic year of the designated beneficiary's initial enrollment in an eligible educational institution.
(d)
The account owner or the designated beneficiary provides false or misleading information to the board, the program manager, or an eligible educational institution.
(2) Prior to termination, the program manager shall give reasonable notice to the account owner of the proposed termination. The notice shall provide a reasonable period of time, as determined by the board, in which to prevent termination by either making an additional contribution or a qualified distribution as necessary. Upon termination, the account balance shall be paid to the account owner as a nonqualified distribution, subject to applicable federal or state taxes, and any additional fees as determined by the board.
Treas 1.15 Fees. The board may charge account owners a fee for the administrative expenses of the program. Fees shall be clearly identified in the program description that accompanies the participation agreement.
Treas 1.16 Penalties. The board may impose penalties as necessary to maintain eligibility as a qualified tuition program under section
529 of the internal revenue code.
Treas 1.17 Investment Policies. The board shall establish all investment guidelines for the program.
Initial Regulatory Flexibility Analysis
Pursuant to section
227.114, Stats., the rule herein is not expected to negatively impact small businesses.
Fiscal Estimate
No State Fiscal Effect. The rule establishes procedures for operation of the Wisconsin college savings program. The program has been budgeted based on estimates of participation. The procedures permit the program to proceed and do not change the basis for participation in the program.
Contact Person
Marty Olle
Office of the State Treasurer
1 South Pinckney Street, 5th Floor
P.O. Box 7871
Madison, WI 53707-7871
(608) 264-7886
Notice of Hearing
NOTICE IS HEREBY GIVEN that pursuant to Sections
49.137 (4m) and
227.11, Stats., the Department of Workforce Development proposes to hold a public hearing to consider the creation of rules relating to grants supporting community child care initiatives.
Hearing Information:
February 26, 2002 GEF 1 Building, Room B103
Tuesday 201 E. Washington Avenue
1:30 p.m. MADISON
Interested persons are invited to appear at the hearing and will be afforded the opportunity to make an oral presentation of their positions. Persons making oral presentations are requested to submit their facts, views, and suggested rewording in writing.
Visitors to the GEF 1 building are requested to enter through the left East Washington Avenue door and register with the customer service desk. The entrance is accessible via a ramp from the corner of Webster Street and East Washington Avenue. If you have special needs or circumstances that may make communication or accessibility difficult at the hearing, please call (608) 267-9403 at least 10 days prior to the hearing date. Accommodations such as ASL interpreters, English translators, or materials in audiotape format will be made available on request to the fullest extent possible.
Analysis Prepared by the Department of Workforce Development
In July 2000, the Joint Finance Committee approved expenditure authority for a new program that allows the Department of Workforce Development to utilize monies available from federal child care and development block grant funds to award grants to local governments that can identify and certify the required match. Statutory authority for the program was included in
2001 Wis. Act 16 at s.
49.137 (4m), Stats.
The proposed rules specify the eligibility criteria and procedures for awarding the grants under s.
49.137 (4m), Stats. The department shall periodically publish a request for proposals for community child care initiatives. Any local government or tribe that is located in Wisconsin may submit an application. A single application may be submitted by a local government or tribe that certifies all the match funds required for the requested grant amount. A cooperative application may be submitted by several local governments or tribes that submit a package of otherwise single applications that individually identify match and request separate agreements with the department. A collaborative application may be submitted by one local government or tribe on behalf of two or more local governments or tribes that provide matching funds.
A local government or tribe that applies for funds must certify matching expenditures. The minimum match expenditure required under federal law is the federal medical assistance percentage for Wisconsin for the federal fiscal year in which the match expenditure occurs. The department may round this percentage of required match to the nearest higher full percentage point. A match expenditure must be from locally-generated revenues or federal revenues specifically authorized by federal law to be used as match to federal funds. A match expenditure may not be used as match to any other state or federal funds, must be made during the required matching period, and must be made for qualifying child care services and programs, including programs with the following purposes:
• Providing low-income families with financial resources to find and access quality child care for their children.
• Enhancing the quality and increasing the supply of child care for all families, including those who receive no direct assistance under s.
49.155, Stats.
• Providing parents with a broad range of options in addressing their child care needs.
• Improving the quality of and coordination among child care programs and early childhood development programs.
• Increasing the availability of early childhood development care services and before- and after-school care services.
• Educating consumers about child care.
• Improving the health and safety aspects of child care, including regulation of child care.
Expenditures for public pre-kindergarten programs or pre-school programs operated by public school districts may not exceed 20% of the total match expenditure for each application.
A local government or tribe may use grant funds received under this chapter in the following ways:
• Enhancing the quality and increasing the supply of child care for all families, including those who receive no direct assistance under s.
49.155, Stats.
• Providing parents with a broad range of options in addressing their child care needs.
• Improving the quality of and coordination among child care programs and early childhood development programs.
• Increasing the availability of early childhood development care services and before- and after-school care services.
• Educating consumers about child care.
• Improving the health and safety aspects of child care, including regulation of child care.
• Providing crisis respite child care to children in protective services cases or in need of protective services.
A local government or tribe may not use grant funds received under this chapter for purchase of real estate; construction or major remodeling; kindergarten to 12th grade public education or care services provided to students during the regular school day; direct purchase or payment of child care services, unless the child is receiving or is in need of protective services; or public pre-kindergarten services.
