SSSB 186: "An Act relating to the Alaska Higher Education Savings Trust; and providing for an effective date."
00SPONSOR SUBSTITUTE FOR SENATE BILL NO. 186 01 "An Act relating to the Alaska Higher Education Savings Trust; and providing 02 for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 14.40 is amended by adding a new section to read: 05 Article 5A. Alaska Higher Education Savings Trust. 06 Sec. 14.40.802. Alaska Higher Education Savings Trust. (a) The Alaska 07 Higher Education Savings Trust is established in the University of Alaska. The Board 08 of Regents of the University of Alaska shall 09 (1) administer, manage, promote, and market the trust; 10 (2) maintain the trust in compliance with United States Internal 11 Revenue Service standards for a qualified state tuition program as the term is defined 12 in 26 U.S.C. 529(b); 13 (3) establish application and withdrawal procedures and a participation 14 agreement for trust participants;
01 (4) issue requests for proposals for multiple contractors to act as 02 investment managers; in determining the best qualified persons to act as investment 03 managers, the board shall consider the ability to 04 (A) administer financial programs with individual account 05 maintenance and reporting; 06 (B) develop and administer an investment program with similar 07 objectives to those of the trust; and 08 (C) augment the trust with other programs or services 09 considered beneficial by the board; 10 (5) require trust participants to pay appropriate fees; 11 (6) operate the trust on a cash only basis, including provisions for 12 automatic deductions; 13 (7) allow both residents and nonresidents to participate in the trust; 14 (8) allow funds deposited with the trust to be used for any qualified 15 higher education expenses; 16 (9) establish a penalty on nonqualified withdrawals from the trust; the 17 penalty established must satisfy the minimum penalty requirements of the United States 18 Internal Revenue Service for nonqualified withdrawals from a qualified state tuition 19 program. 20 (b) The board may 21 (1) divide the trust into multiple investment portfolios; 22 (2) commingle amounts credited to some or all accounts for investment 23 purposes. 24 (c) The University of Alaska, the state, or an agency of the state is not liable 25 for a loss of funds that are invested under a participation agreement. The board shall 26 provide written notice to each applicant that the trust does not guarantee any rate of 27 return and that any risk of loss in fund value rests with the participants. 28 (d) Notwithstanding any other provision of law, earnings on funds deposited 29 with the trust are not subject to taxation by the state or a municipality. 30 (e) Funds deposited with the trust or earnings of the trust may not be 31 considered by the University of Alaska or an agency of the state when determining
01 eligibility for a scholarship. 02 (f) A participant has the right at any time to 03 (1) change the beneficiary of an account to another individual who is 04 a member of the family of the former beneficiary; or 05 (2) direct that all or a portion of an account be transferred to an 06 account with a new beneficiary if the new beneficiary is a member of the family of 07 the former beneficiary. 08 (g) The right to change the beneficiary or to transfer between accounts 09 described in (f) of this section may be denied if, under regulations adopted by the 10 board, the exercise of the right would result in either excess contributions to an 11 account or would constitute an impermissible investment by the participant. 12 (h) An account established under this section 13 (1) is exempt from a claim by the creditors of a participant or of a 14 beneficiary; 15 (2) is conclusively presumed to be a spendthrift trust; 16 (3) is not an asset or property of either the participant or the 17 beneficiary; 18 (4) may not be assignable, pledged, or otherwise used to secure a loan 19 or other advancement; 20 (5) is not subject to involuntarily transfer or alienation. 21 (i) Except as permitted in 26 U.S.C. 529, a participant or beneficiary may not 22 directly or indirectly direct the investment of an account or earnings on the account. 23 (j) A participant may, at any time, designate a person other than the participant 24 as a successor participant by executing and dating an instrument of designation and 25 delivering it to the board. The designation of a successor participant does not take 26 effect until the participant dies. If a participant dies without having effectively 27 designated a successor participant, the beneficiary may designate a successor 28 participant in the manner prescribed above if the beneficiary is not the same person 29 as the successor participant. 30 (k) In this section, 31 (1) "account" means an individual trust account established under this
01 section; 02 (2) "beneficiary" means any person designated by a participation 03 agreement, or by another method of designation authorized in this section, to benefit 04 from payments for qualified higher education expenses at an eligible educational 05 institution; 06 (3) "board" means the Board of Regents of the University of Alaska; 07 (4) "eligible educational institution" means an institution of higher 08 education that meets the requirements established by the board consistent with 09 26 U.S.C. 529(e); 10 (5) "member of the family" has the meaning given in 26 U.S.C. 529(e); 11 (6) "nonqualified withdrawal" means a withdrawal from an account that 12 is not a 13 (A) qualified withdrawal; 14 (B) withdrawal made as the result of the death or disability of 15 the designated beneficiary of an account; or 16 (C) withdrawal made as a result of receiving a scholarship; 17 (7) "participant" means a person who has entered into a participation 18 agreement; 19 (8) "participation agreement" means an agreement between a participant 20 and the board providing for the establishment by the participant of one or more 21 accounts under this section and for the administration of those accounts for the benefit 22 of the participant and the beneficiary; 23 (9) "qualified higher education expenses" has the meaning given in 26 24 U.S.C. 529(e); 25 (10) "qualified withdrawal" means a withdrawal from an account to pay 26 the qualified higher education expenses of the designated beneficiary of the account; 27 (11) "trust" means the Alaska Higher Education Savings Trust. 28 * Sec. 2. AS 45.55.990(32) is amended to read: 29 (32) "security" means a note; stock; treasury stock; bond; debenture; 30 evidence of indebtedness; certificate of interest or participation in any profit-sharing 31 agreement; limited liability company interest under AS 10.50, notwithstanding the
01 limitations of AS 45.08.103(c); collateral-trust certificate; preorganization certificate 02 or subscription; transferable share; investment contract; voting-trust certificate; 03 certificate of deposit for a security; certificate of interest or participation in an oil, gas, 04 or mining title or lease or in payments out of production under the title or lease or in 05 any sale of or indenture or bond or contract for the conveyance of land or any interest 06 in land; an option on a contract for the future delivery of agricultural or mineral 07 commodities or any other commodity offered or sold to the public and not regulated 08 by the Commodity Futures Trading Commission; however, the contract or option is not 09 subject to the provisions of AS 45.55.070 if it is sold or purchased on the floor of a 10 bona fide exchange or board of trade and offered or sold to the public by a broker- 11 dealer or agent registered under this chapter; investment of money or money's worth including 12 goods furnished or services performed in the risk capital of a venture with the expectation of 13 some benefit to the investor where the investor has no direct control over the investment or 14 policy decision of the venture; or, in general, any interest or instrument commonly known as 15 a "security," or any certificate of interest or participation in, temporary or interim certificate 16 for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the 17 foregoing; "security" does not include a participation agreement entered into under 18 AS 14.40.802 or an insurance or endowment policy or annuity contract under which an 19 insurance company promises to pay a fixed or variable sum of money either in a lump sum 20 or periodically for life or for some other specified period; 21 * Sec. 3. This Act takes effect immediately under AS 01.10.070(c).