§ 3483 Purpose.
It is the intent and purpose of the General Assembly through this subchapter to establish the Delaware College Investment Plan pursuant to 26 U.S.C. § 529 or successor section and to charge the Plans Management Board to implement and maintain the Plan through the adoption of rules and regulations for the administration of the Plan.
§ 3484 Administration; authority.
This subchapter shall be administered by the Plans Management Board pursuant to § 2722 of Title 29.
71 Del. Laws, c. 71, § 1; 72 Del. Laws, c. 114, § 1; 72 Del. Laws, c. 300, §§ 2, 3; 73 Del. Laws, c. 188, § 2; 74 Del. Laws, c. 68, § 19; 75 Del. Laws, c. 350, § 164; 77 Del. Laws, c. 431, §§ 11, 12; 80 Del. Laws, c. 295, § 1.;
§ 3485 Definitions.
As used in this subchapter:
(1) "Account" means an individual account, a trust account or a savings account established in accordance with this subchapter.
(2) "Account owner" means the individual, individuals, or the trustee of a trust identified at the time the account is opened as having the right to withdraw funds from the account.
(3) "Board" means the Plans Management Board pursuant to § 2722 of Title 29.
(4) "Designated beneficiary" means, except as provided in § 3490 of this title, the individual designated at the time the account is opened as having the right to receive a qualified withdrawal for the payment of qualified higher education expenses or, if such designated beneficiary is replaced in accordance with § 3490 of this title, such replacement.
(5) "Financial institution" means a bank, a commercial bank, a national bank, a savings bank, a savings and loan, a thrift institution, a credit union, an insurance company, a trust company, a mutual fund, an investment firm or other similar entity authorized to do business in this State.
(6) "Higher education institution" means an eligible education institution as defined in 26 U.S.C. § 135(c)(3).
(7) "Member of the family" shall have the same meaning as contained in 26 U.S.C. § 529(e) or successor section.
(8) "Nonqualified withdrawal" means a withdrawal from an account that is not:
a. A qualified withdrawal;
b. A withdrawal made as the result of the death or disability of the designated beneficiary;
c. A withdrawal made as the result of a scholarship (or allowance or payment described in 26 U.S.C. § 135(d)(1)(B) or (C)) received by the designated beneficiary, but only to the extent of the amount of such scholarship, allowance or payment; or
d. A rollover or change in the designated beneficiary described in § 3490 of this title.
(9) "Plan" means the Delaware College Investment Plan established by this subchapter.
(10) "Qualified higher education expenses" means tuition and other permitted expenses as presently set forth in 26 U.S.C. § 529(e) or as hereafter permitted by such successor or amended section for the enrollment or attendance of a designated beneficiary at a higher education institution.
(11) "Qualified withdrawal" means a withdrawal from an account to pay the qualified higher education expenses of the designated beneficiary, but only if the withdrawal is made in accordance with the requirements of the Plan.
(12) "Trust" means a trust which is revocable or irrevocable and which has at least 1 individual as its current beneficiary.
§ 3486 Powers of the Board.
§ 3487 The Program.
(a) An account owner may establish an account by making an initial contribution to the Plan in the name of the designated beneficiary. Once a contribution is made it becomes part of the Plan and subject to this subchapter.
(b) Any person may make a contribution to an account once an account is opened. If the account owner is a trust, the trustee must consent to the contribution.
(c) Contributions to an account shall be made only in cash.
(d) Total contributions to all accounts shall not exceed those reasonably necessary, considering the return on contributions and the age and circumstances of the designated beneficiary, to provide for the qualified higher education expenses of the beneficiary. The Board shall establish maximum contribution limits applicable to Plan accounts and shall require such information from the account owner and the designated beneficiary to establish the limit as it relates to such account.
(e) Separate records and accounting shall be required by the Plan for each account and reports shall be made no less frequently than annually to the account owner and the designated beneficiary.
(f) In the case of an account owner which is a trust, the Board shall require such information from the account owner as is necessary to establish compliance with the Plan.
§ 3488 Investment direction.
§ 3489 Prohibitions.
(a) No account nor any interest in an account shall be assignable or pledged or otherwise used to secure or obtain a loan or other advancement.
(b) No refund of a qualified educational expense payment may be paid by a higher education institution directly to the designated beneficiary or to the account owner. Any refund of qualified tuition expenses owed by a higher education institution on account of an overpayment of educational expenses must be refunded to the Plan for credit to the designated beneficiary's account.
(c) A qualified withdrawal that is used to pay for qualified education expenses must be paid jointly to the designated beneficiary and the higher education institution or directly to the higher education institution. A payment of qualified education expenses may not be made directly to the beneficiary.
(d) Total contributions to all accounts established on behalf of a particular beneficiary in excess of those reasonably necessary to meet the designated beneficiary's qualified higher education expenses are prohibited.
(e) Except as permitted in 26 U.S.C. § 529 and regulations thereunder, no person shall have the right to direct the investment of any contributions to or earnings from the Plan.
§ 3490 Designated beneficiary.
(a) An account owner shall have the right at any time to change the designated beneficiary of an account to another individual who is a member of the family of the former designated beneficiary, and, in the case of an account owner which is a trust, to another person who is also a beneficiary of the trust.
(b) An account owner shall have the right at any time to direct that all or a portion of an account be transferred to the account of another beneficiary if the designated beneficiaries are members of the same family, and, in the case of an account owner which is a trust, to the account of another beneficiary if the designated beneficiary is also a beneficiary of the trust.
(c) The right to change the designated beneficiary or to transfer between accounts contained in subsections (a) and (b) of this section may be denied if, under regulations adopted by the Board, the exercise of the right would result in either excess contributions to an account or the exercise of impermissible investment direction by the account owner.
§ 3491 Account withdrawals; penalties.
(a) Withdrawal from an account may be made on 30 days' written notice to the Board or on such shorter notice as the Board may by regulation provide. A withdrawal shall be designated as a qualified withdrawal or a nonqualified withdrawal and the application shall provide such information and be made on such forms as the Board shall find are necessary to enable the Board to determine the nature of the withdrawal.
(b) An account withdrawal paid to or for the benefit of any person during any calendar year shall be reported to the person and the Internal Revenue Service. The report shall be made at the time and contain such information as required by law.
(c) The Board shall establish a more than de minimis penalty, at the minimum amount necessary to satisfy the requirements of § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section for a nonqualified withdrawal on the portion of the withdrawal that constitutes income under § 529 of Title 26 of the United States Code [26 U.S.C. § 529] or successor section.
(d) Penalties collected under this section may be used to defray the costs of the Plan.