Establishes the New York state pre-paid tuition plan by which a person may contribute to an account for the pre-payment of college tuition, tax free.
TITLE OF BILL: An act to amend the education law, the state finance law, the civil practice law and rules and the tax law, in relation to establishing the New York state pre-paid tuition plan
PURPOSE: To create a New York pre-paid tuition plan to give parents the opportunity to lock in current tuition rates for their children's college education.
SUMMARY OF PROVISIONS:
Section 1 amends the education law by creating article 14-B of the education law.
Section 696 of the new article establishes the short title of the act, the New York state pre-paid tuition plan.
Section 696-a of the new article sets the definitions to be used in the new article.
Section 696-b of the new act establishes the pre-paid tuition plan board. The board shall have nine members, including the chancellor of the state university, the chancellor of the city university, the state comptroller, the chairman of the higher education services corporation or their designees, three members appointed by the governor, and two members representing community colleges appointed by the boards of trustees of the state and city universities. Appointed members shall serve three year terms and receive no compensation. The board is deemed a public agency and is covered by the relevant laws.
Section 696-c of the new article sets the powers and duties of the board. The board has the power to develop a pre-paid tuition plan and establish a system by which tuition would be paid to the state and city university and participating independent institutions. The board shall establish the method by which the fund will be administrated and how funds in accounts will be disbursed The board has the power to engage the services of consultants on a contract basis as needed for the implementation of the plan. The board shall develop the marketing program for the plan.
Section 696-d of the new article establishes the post of executive director of the plan and establishes the powers of the executive director.
Section 696-e of the new article establishes the plan requirements. Plan accounts will be for tuition expenses at the state or city university or at any independent colleges that chose to participate. This section lays out the rules for applying and in what form contributions can be made. It establishes that four years must pass between when an account in opened and when the tuition purchased can be redeemed. Rules for withdrawals and other transfers will be in line with such rules in section 529 of the internal revenue code. Accounting and disclosure requirements are set. It is established that opening an account does not entitle the beneficiary to acceptance into a particular institution of higher learning.
Section 696-f of the new article establishes the fiscal and financial powers and responsibilities of the board and the state comptroller's office with regards to the funds deposited in the plan. These include the ability to contract with financial organizations to deposit or manage the funds. It lays out the requirements for annual audits of the plan and examinations of the handling and management of accounts.
Section 696-g of the new article establishes that in the event that in any one year the funds in the plan are insufficient to meet the obligations in the plan, the executive budget shall include a sum necessary to cover the shortfall. The appropriation of such funds shall be subject to legislative approval. The sum shall be in the form of a loan that must be repaid to the state.
Section 2 amends state finance law by adding a new section 78-c that establishes the New York state pre-paid tuition plan fund. The comptroller, acting with the consent of the pre-paid board, shall have to power to invest the funds in the plan fund. Such investments shall meet the requirements of article four-A of the retirement and social security law, with exceptions.
Section 3 amends section 5205 of the civil practice law to state that monies in a pre-paid tuition account are exempt from money judgments against the account owner or designated beneficiary.
Section 4 of the bill amends subparagraph A of paragraph 2 of subsection t of section 606 of the tax law to give pre-paid tuition accounts the same treatment as college choice tuition accounts. The maximum amounts that can be deducted for contributions to such accounts is doubled, from five to ten thousand for individual filers and from ten to twenty thousand for married individuals filing jointly.
JUSTIFICATION: The cost of tuition and fees for college have grown significantly faster than inflation for many years. Tuitions at both private and public colleges and universities grew an average of 4% between the 2011-2012 academic year and the 2012-2013 academic year. This rate is significantly higher than that of inflation, which has held below 2% since 2008, and it is certainly higher that the rate of growth for the salaries and wages of families in New York State.
The IDC proposes the creation of the Pre-paid Tuition Plan which will help families guard against such increases in tuition rates by allowing them to buy tuition credit at both public or participating private Colleges and Universities in New York for their children at current tuition prices. This program also allows parents to spread out the cost of paying for tuition over multiple years, thus lessening the burden on their families.
The underlying idea behind a Pre-paid College Tuition Plan is the creation of a fund into which parents can place money to pay future college expenses. The payments into the fund come in the form of paying for a portion of tuition at a participating college or university at current tuition costs. The money in the fund is then invested so that when that pre-paid tuition unit is redeemed by the parent, the original payment plus the earned interest will be enough so that the participating colleges and universities get the same
amount of revenue as if the parent were paying for tuition at that moment. In this way, parents save money without participating colleges and universities having to lose out on income.
Pre-paid College Tuition Plans exist in many other States, such as Florida, Pennsylvania, Washington, Illinois, and Texas. There is a lot of variations found between the different plans offered by those varied States and the IDC proposal takes the best features from these plans in order to ensure that parents are able to get the savings they need while keeping the fund safe and viable. The IDC proposal would allow parents to purchase whole or portions of semester credit hours at current tuition rates with the guarantee that this payment will be honored if their child is accepted to the participating college or university. The plan gives parents the option to chose between different plans depending on the possible educational choices that their child will make. For example, parents could chose between buying credits towards an Associate's degree at a community college or a Bachelor's degree at a four-year university or a combination of the two. Contributions into this fund would get the same preferential tax treatment given to funds set aside in a 529 College Savings Account.
The Pre-paid College Tuition Plan fund would be under the supervision of a new Pre-paid tuition board comprised of members from our public universities, the comptroller's office, the corporation for higher education services, and other experts in finance and higher education funding and management. This independent board would have the authority to chose the fund's administration. As with all other Pre-paid College Tuition Plans, there would be certain safeguards and limits in place to ensure the future viability of the fund, including setting a limit on the time between when a semester credit hour of tuition was purchased and when it could first be utilized and what the minimum age for the beneficiary would be. The board would also set up the rules regarding withdrawals that would conform to federal guidelines governing pre-paid tuition programs.
The IDC believes that ensuring a strong and viable fund is a critical requirement in order to make a Pre-paid College Tuition Plan successful.
LEGISLATIVE HISTORY: This is a new bill
FISCAL IMPLICATIONS: The state will have to pay for the initial creation of the pre-paid tuition board. The cost of this initial creation is estimated to be $2 million. Doubling the amount that individuals are able to deduct for contributions to both the existing college choice savings accounts and the new pre-paid tuition accounts could lead to a loss of revenue to the state of $55 million in the most conservative estimate.
EFFECTIVE DATE: This act shall take effect immediately and apply for the tax year commencing on December 31, 2014.
STATE OF NEW YORK ________________________________________________________________________ 6698 IN SENATE February 28, 2014 ___________Introduced by Sens. CARLUCCI, KLEIN, SAVINO, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education AN ACT to amend the education law, the state finance law, the civil practice law and rules and the tax law, in relation to establishing the New York state pre-paid tuition plan THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The education law is amended by adding a new article 14-B to read as follows: ARTICLE 14-B NEW YORK STATE PRE-PAID TUITION PLAN SECTION 696. SHORT TITLE. 696-A. DEFINITIONS. 696-B. PRE-PAID TUITION PLAN BOARD. 696-C. POWERS AND DUTIES OF THE BOARD. 696-D. EXECUTIVE DIRECTOR. 696-E. PLAN REQUIREMENTS. 696-F. POWERS OF THE BOARD AND COMPTROLLER. 696-G. STATE GUARANTEE. S 696. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY BE CITED AS THE "NEW YORK STATE PRE-PAID TUITION PLAN". S 696-A. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS: 1. "ACCOUNT" OR "PRE-PAID TUITION ACCOUNT" SHALL MEAN AN INDIVIDUAL PRE-PAID TUITION ACCOUNT ESTABLISHED IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE. 2. "ACCOUNT OWNER" SHALL MEAN A PERSON WHO ENTERS INTO A PRE-PAID TUITION AGREEMENT PURSUANT TO THE PROVISIONS OF THIS ARTICLE, INCLUDING A PERSON WHO ENTERS INTO SUCH AN AGREEMENT AS A FIDUCIARY OR AGENT ON BEHALF OF A TRUST, ESTATE, PARTNERSHIP, ASSOCIATION, COMPANY OR CORPO- RATION. THE ACCOUNT OWNER MAY ALSO BE THE DESIGNATED BENEFICIARY OF THE ACCOUNT.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13274-02-4 S. 6698 2
3. "BOARD" SHALL MEAN THE PRE-PAID TUITION PLAN BOARD, ESTABLISHED PURSUANT TO SECTION SIX HUNDRED NINETY-SIX-B OF THIS ARTICLE. 4. "CITY UNIVERSITY" SHALL MEAN THE CITY UNIVERSITY OF NEW YORK. 5. "COMPTROLLER" SHALL MEAN THE STATE COMPTROLLER. 6. "CORPORATION" SHALL MEAN THE NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION. 7. "DESIGNATED BENEFICIARY" SHALL MEAN, WITH RESPECT TO AN ACCOUNT OR ACCOUNTS, THE INDIVIDUAL DESIGNATED AS THE INDIVIDUAL WHOSE TUITION EXPENSES ARE EXPECTED TO BE PAID FROM THE ACCOUNT OR ACCOUNTS. 8. "ELIGIBLE EDUCATIONAL INSTITUTION" SHALL MEAN ANY INSTITUTION OF HIGHER EDUCATION DEFINED AS AN ELIGIBLE EDUCATIONAL INSTITUTION IN SECTION 529(E)(5) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. 9. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION AUTHORIZED TO DO BUSINESS IN THE STATE AND A. WHICH IS AN AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR AN INSURANCE COMPANY; AND B. (I) IS LICENSED OR CHARTERED BY THE DEPARTMENT OF FINANCIAL SERVICES, (II) IS CHARTERED BY AN AGENCY OF THE FEDERAL GOVERNMENT, (III) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE SECURITIES AND EXCHANGE COMMIS- SION OF THE FEDERAL GOVERNMENT, OR (IV) IS ANY OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME. 10. "MANAGEMENT CONTRACT" SHALL MEAN THE CONTRACT EXECUTED BY THE BOARD AND A FINANCIAL ORGANIZATION SELECTED TO ACT AS A DEPOSITORY AND MANAGER OF THE PLAN. 11. "MEMBER OF FAMILY" SHALL MEAN A FAMILY MEMBER AS DEFINED IN SECTION 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. 12. "NONQUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT, BUT SHALL NOT MEAN: A. A QUALIFIED WITHDRAWAL; B. A WITHDRAWAL MADE AS THE RESULT OF THE DEATH OR DISABILITY OF THE DESIGNATED BENEFICIARY OF AN ACCOUNT; OR C. A WITHDRAWAL MADE ON THE ACCOUNT OF A SCHOLARSHIP. 13. "PLAN" SHALL MEAN THE NEW YORK STATE PRE-PAID TUITION PLAN ESTAB- LISHED PURSUANT TO THIS ARTICLE. 14. "PLAN MANAGER" SHALL MEAN A FINANCIAL ORGANIZATION SELECTED BY THE BOARD TO ACT AS A DEPOSITORY AND MANAGER OF THE PLAN. 15. "QUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT TO PAY THE QUALIFIED TUITION EXPENSES OF THE DESIGNATED BENEFICIARY. 16. "STATE UNIVERSITY" SHALL MEAN THE STATE UNIVERSITY OF NEW YORK. 17. "TUITION" SHALL MEAN ANY MANDATORY CHARGES IMPOSED BY AN ELIGIBLE EDUCATIONAL INSTITUTION FOR ATTENDANCE FOR AN ACADEMIC YEAR AS A CONDI- TION OF ENROLLMENT. SUCH TERM SHALL NOT INCLUDE LABORATORY FEES, ROOM AND BOARD, OR OTHER SIMILAR FEES AND CHARGES. 18. "TUITION SAVINGS AGREEMENT" SHALL MEAN AN AGREEMENT BETWEEN THE BOARD OR A FINANCIAL ORGANIZATION AND AN ACCOUNT OWNER. S 696-B. PRE-PAID TUITION PLAN BOARD. 1. THE PRE-PAID TUITION PLAN BOARD IS HEREBY ESTABLISHED. SUCH BOARD SHALL BE COMPOSED OF NINE MEMBERS AS FOLLOWS: A. THE CHANCELLOR OF THE STATE UNIVERSITY, OR HIS OR HER DESIGNEE; B. THE CHANCELLOR OF THE CITY UNIVERSITY, OR HIS OR HER DESIGNEE; C. THE COMPTROLLER, OR HIS OR HER DESIGNEE; D. THE CHAIRMAN OF THE CORPORATION, OR HIS OR HER DESIGNEE; E. THREE MEMBERS APPOINTED BY THE GOVERNOR AS FOLLOWS:S. 6698 3
(I) ONE INDIVIDUAL WITH EXPERIENCE IN HIGHER EDUCATION ADMINISTRATION OF AN INDEPENDENT COLLEGE OR UNIVERSITY, AND (II) TWO INDIVIDUALS WITH EXPERIENCE IN ACTUARIAL PRACTICES AND INVESTMENT BANKING; F. A MEMBER REPRESENTING COMMUNITY COLLEGES AFFILIATED WITH THE STATE UNIVERSITY APPOINTED BY THE BOARD OF TRUSTEES OF THE STATE UNIVERSITY; AND G. A MEMBER REPRESENTING COMMUNITY COLLEGES AFFILIATED WITH THE CITY UNIVERSITY APPOINTED BY THE BOARD OF TRUSTEES OF THE CITY UNIVERSITY. 2. EACH MEMBER APPOINTED BY THE GOVERNOR, THE BOARD OF TRUSTEES OF THE STATE UNIVERSITY OR THE BOARD OF TRUSTEES OF THE CITY UNIVERSITY SHALL SERVE A TERM OF THREE YEARS. VACANCIES IN THE MEMBERSHIP OF THE BOARD SHALL BE FILLED IN THE MANNER PROVIDED FOR ORIGINAL APPOINTMENTS. 3. THE MEMBERS OF THE BOARD SHALL RECEIVE NO COMPENSATION FOR THEIR SERVICES, BUT SHALL BE ALLOWED THEIR ACTUAL AND NECESSARY EXPENSES INCURRED IN THE PERFORMANCE OF THEIR DUTIES PURSUANT TO THIS ARTICLE. 4. THE BOARD AND THE PLAN SHALL BE DEEMED TO BE PUBLIC AGENCIES AND SHALL BE SUBJECT TO ALL PROVISIONS OF LAW RELATING THERETO. S 696-C. POWERS AND DUTIES OF THE BOARD. THE BOARD SHALL ADMINISTER THE PLAN AND SHALL DEVELOP AND IMPLEMENT PROGRAMS FOR THE PREPAYMENT OF UNDERGRADUATE TUITION, AT A FIXED, GUARANTEED LEVEL FOR APPLICATION AT ANY TWO-YEAR OR FOUR-YEAR ELIGIBLE EDUCATIONAL INSTITUTION AS DEFINED IN S 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR OTHER APPLI- CABLE FEDERAL LAW. IN ADDITION, THE BOARD SHALL HAVE THE POWER AND DUTY TO: 1. DEVELOP AND IMPLEMENT THE PLAN IN A MANNER CONSISTENT WITH THE PROVISIONS OF THIS ARTICLE THROUGH RULES AND REGULATIONS ESTABLISHED IN ACCORDANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT; 2. MAKE ARRANGEMENTS WITH THE STATE UNIVERSITY, CITY UNIVERSITY AND ANY ELIGIBLE EDUCATIONAL INSTITUTION LOCATED WITHIN THE STATE WHICH CHOOSES TO PARTICIPATE, TO FULFILL OBLIGATIONS UNDER PREPAID TUITION CONTRACTS FOR TWO-YEAR OR FOUR-YEAR DEGREE PROGRAMS, INCLUDING, BUT NOT LIMITED TO, PAYMENT FROM THE PLAN OF THE THEN ACTUAL IN-STATE UNDERGRAD- UATE TUITION COST ON BEHALF OF A QUALIFIED BENEFICIARY OF A PREPAID TUITION CONTRACT TO THE INSTITUTION IN WHICH SUCH BENEFICIARY IS ADMIT- TED AND ENROLLED, AND APPLICATION OF SUCH BENEFITS TOWARDS GRADUATE-LEV- EL TUITION AND TOWARDS TUITION COSTS AT SUCH ELIGIBLE EDUCATIONAL INSTI- TUTIONS, AS THAT TERM IS DEFINED IN 26 U.S.C. S 529 OR ANY OTHER APPLICABLE SECTION OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AS DETERMINED BY THE BOARD IN ITS SOLE DISCRETION. SUCH ARRANGEMENTS MUST INCLUDE PLANS THAT ALLOW AN ACCOUNT OWNER TO ENTER INTO CONTRACTS IN WHICH HE OR SHE CAN PURCHASE TUITION IN INSTALLMENTS EQUAL TO THE COST OF SEMESTERS AS A FULL TIME STUDENT, BUT CAN ALSO INCLUDE PLANS THAT WOULD ALLOW FOR THE PREPAYMENT OF TUITION FOR INDIVIDUAL COURSE CREDITS; 3. ENGAGE THE SERVICES OF CONSULTANTS ON A CONTRACT BASIS FOR RENDER- ING PROFESSIONAL AND TECHNICAL ASSISTANCE AND ADVICE; 4. SEEK RULINGS AND OTHER GUIDANCE FROM THE UNITED STATES DEPARTMENT OF TREASURY AND THE INTERNAL REVENUE SERVICE RELATING TO THE PROGRAM; 5. MAKE CHANGES TO THE PLAN REQUIRED FOR THE PARTICIPANTS TO OBTAIN THE FEDERAL INCOME TAX BENEFITS OR TREATMENT PROVIDED BY SECTION 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR ANY SIMILAR SUCCESSOR LEGISLATION; 6. CHARGE, IMPOSE AND COLLECT ADMINISTRATIVE FEES AND SERVICE CHARGES IN CONNECTION WITH ANY AGREEMENT, CONTRACT OR TRANSACTION RELATING TO THE PLAN; 7. DEVELOP MARKETING PLANS AND PROMOTION MATERIAL;S. 6698 4
8. ESTABLISH THE METHODS BY WHICH THE FUNDS HELD IN SUCH ACCOUNTS BE DISPERSED; 9. ESTABLISH THE METHOD BY WHICH FUNDS SHALL BE ALLOCATED TO PAY FOR ADMINISTRATIVE COSTS; AND 10. DO ALL THINGS NECESSARY AND PROPER TO CARRY OUT THE PURPOSES OF THIS ARTICLE. S 696-D. EXECUTIVE DIRECTOR. 1. THE BOARD SHALL APPOINT AND EMPLOY AN EXECUTIVE DIRECTOR TO DIRECT, MANAGE AND ADMINISTER THE PLAN, AND WHO SHALL BE AUTHORIZED TO EMPLOY SUCH PERSONNEL AS SHALL BE NECESSARY TO IMPLEMENT THE PROVISIONS OF THIS ARTICLE. 2. THE INDIVIDUAL APPOINTED AS EXECUTIVE DIRECTOR SHALL HAVE DEMON- STRATED EXTENSIVE EXPERIENCE IN MANAGEMENT, FINANCE, LAW, REGULATORY AFFAIRS AND/OR INVESTMENT, AND SHALL HAVE SUCH OTHER QUALIFICATIONS AS THE BOARD SHALL DETERMINE. 3. THE EXECUTIVE DIRECTOR SHALL, IN ADDITION TO SUCH DUTIES AS THE BOARD SHALL ESTABLISH: A. OVERSEE THE DEVELOPMENT, STRUCTURE, EVALUATION AND IMPLEMENTATION OF THE PLAN'S STRATEGIC GOALS AND OBJECTIVES; B. FACILITATE COMMUNICATION AMONG AND BETWEEN THE BOARD, ADVISORY COMMITTEES, EMPLOYEES, ACCOUNT OWNERS, BENEFICIARIES AND OTHER ENTITIES INTERESTED IN THE PLAN; C. ENHANCE THE BOARD'S ABILITY TO MAKE EFFECTIVE AND PROMPT DECISIONS IN ALL MATTERS RELATED TO THE ADMINISTRATION OF THE PLAN; D. WITH THE ASSISTANCE OF THE BOARD AND INVESTMENT CONSULTANTS, DIRECT, MANAGE AND ADMINISTER THE PLAN'S ASSETS AND PROGRAMS; AND E. REPORT PERIODICALLY AND AS REQUESTED BY THE BOARD. S 696-E. PLAN REQUIREMENTS. 1. EVERY PRE-PAID TUITION ACCOUNT SHALL COMPLY WITH THE PROVISIONS OF THIS SECTION. 2. A PRE-PAID TUITION ACCOUNT MAY BE OPENED BY ANY PERSON WHO DESIRES TO ENTER INTO A CONTRACT FOR PRE-PAYMENT OF TUITION EXPENSES AT AN INSTITUTION OF THE STATE UNIVERSITY, THE CITY UNIVERSITY OR ANY PARTIC- IPATING ELIGIBLE EDUCATIONAL INSTITUTION. AN ACCOUNT OWNER MAY DESIGNATE ANOTHER PERSON AS SUCCESSOR OWNER OF THE ACCOUNT IN THE EVENT OF THE DEATH OF THE ORIGINAL ACCOUNT OWNER. SUCH PERSON WHO OPENS AN ACCOUNT OR ANY SUCCESSOR OWNER SHALL BE CONSIDERED THE ACCOUNT OWNER. A. AN APPLICATION FOR SUCH ACCOUNT SHALL BE IN THE FORM PRESCRIBED BY THE BOARD AND CONTAIN THE FOLLOWING: (I) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFI- CATION NUMBER OF THE ACCOUNT OWNER; (II) THE DESIGNATION OF A DESIGNATED BENEFICIARY; (III) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OF THE DESIGNATED BENEFICIARY; AND (IV) SUCH OTHER INFORMATION AS THE BOARD MAY REQUIRE. B. THE BOARD MAY ESTABLISH A NOMINAL FEE FOR SUCH APPLICATION. 3. ANY PERSON, INCLUDING THE ACCOUNT OWNER, MAY MAKE CONTRIBUTIONS TO AN ACCOUNT AFTER THE ACCOUNT IS OPENED. 4. CONTRIBUTIONS TO ACCOUNTS MAY BE MADE ONLY IN CASH. 5. FOUR YEARS MUST ELAPSE BETWEEN THE ESTABLISHMENT OF A PRE-PAID TUITION ACCOUNT AND THE TIME THE FIRST QUALIFIED WITHDRAWAL IS MADE FOR THE PAYMENT OF TUITION EXPENSES. 6. AN ACCOUNT OWNER MAY WITHDRAW ALL OR PART OF THE BALANCE FROM AN ACCOUNT ON SIXTY DAYS NOTICE OR SUCH SHORTER PERIOD AS MAY BE AUTHORIZED UNDER RULES GOVERNING THE PLAN. SUCH RULES SHALL INCLUDE PROVISIONS THAT WILL GENERALLY ENABLE THE DETERMINATION AS TO WHETHER A WITHDRAWAL IS A NONQUALIFIED WITHDRAWAL OR A QUALIFIED WITHDRAWAL.S. 6698 5
7. A. AN ACCOUNT OWNER MAY CHANGE THE DESIGNATED BENEFICIARY OF AN ACCOUNT TO AN INDIVIDUAL WHO IS A MEMBER OF THE FAMILY OF THE PRIOR DESIGNATED BENEFICIARY IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY THE BOARD. B. AN ACCOUNT OWNER MAY TRANSFER ALL OR A PORTION OF AN ACCOUNT TO ANOTHER FAMILY TUITION ACCOUNT, THE SUBSEQUENT DESIGNATED BENEFICIARY OF WHICH IS A MEMBER OF THE FAMILY AS DEFINED IN SECTION 529 OF THE INTER- NAL REVENUE CODE OF 1986, AS AMENDED. 8. THE PLAN SHALL PROVIDE SEPARATE ACCOUNTING FOR EACH DESIGNATED BENEFICIARY. 9. NO ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF ANY ACCOUNT SHALL BE PERMITTED TO DIRECT THE INVESTMENT OF ANY CONTRIBUTIONS TO AN ACCOUNT OR THE EARNINGS THEREON. 10. NEITHER AN ACCOUNT OWNER NOR A DESIGNATED BENEFICIARY SHALL USE AN INTEREST IN AN ACCOUNT AS SECURITY FOR A LOAN. ANY PLEDGE OF AN INTEREST IN AN ACCOUNT SHALL BE OF NO FORCE AND EFFECT. 11. A. IF THERE IS ANY DISTRIBUTION FROM AN ACCOUNT TO ANY INDIVIDUAL OR FOR THE BENEFIT OF ANY INDIVIDUAL DURING A CALENDAR YEAR, SUCH DISTRIBUTION SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE AND THE ACCOUNT OWNER, THE DESIGNATED BENEFICIARY OR THE DISTRIBUTEE TO THE EXTENT REQUIRED BY FEDERAL LAW OR REGULATION. B. STATEMENTS SHALL BE PROVIDED TO EACH ACCOUNT OWNER AT LEAST ONCE EACH YEAR WITHIN SIXTY DAYS AFTER THE END OF THE TWELVE MONTH PERIOD TO WHICH THEY RELATE. THE STATEMENT SHALL IDENTIFY THE CONTRIBUTIONS MADE DURING A PRECEDING TWELVE MONTH PERIOD, THE TOTAL CONTRIBUTIONS MADE TO THE ACCOUNT THROUGH THE END OF THE PERIOD, THE VALUE OF THE ACCOUNT AT THE END OF SUCH PERIOD, DISTRIBUTIONS MADE DURING SUCH PERIOD AND ANY OTHER INFORMATION THAT THE BOARD SHALL REQUIRE TO BE REPORTED TO THE ACCOUNT OWNER. C. STATEMENTS AND INFORMATION RELATING TO ACCOUNTS SHALL BE PREPARED AND FILED TO THE EXTENT REQUIRED BY FEDERAL AND STATE TAX LAW. 12. A. A LOCAL GOVERNMENT OR ORGANIZATION DESCRIBED IN SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, MAY OPEN AND BECOME THE ACCOUNT OWNER OF AN ACCOUNT TO FUND SCHOLARSHIPS FOR PERSONS WHOSE IDENTITY WILL BE DETERMINED UPON DISBURSEMENT. B. IN THE CASE OF ANY ACCOUNT OPENED PURSUANT TO PARAGRAPH A OF THIS SUBDIVISION THE REQUIREMENT SET FORTH IN SUBDIVISION TWO OF THIS SECTION THAT A DESIGNATED BENEFICIARY BE DESIGNATED WHEN AN ACCOUNT IS OPENED SHALL NOT APPLY AND EACH INDIVIDUAL WHO RECEIVES AN INTEREST IN SUCH ACCOUNT AS A SCHOLARSHIP SHALL BE TREATED AS A DESIGNATED BENEFICIARY WITH RESPECT TO SUCH INTEREST. 13. AN ANNUAL FEE MAY BE IMPOSED UPON THE ACCOUNT OWNER FOR THE MAIN- TENANCE OF THE ACCOUNT. 14. THE PLAN SHALL DISCLOSE THE FOLLOWING INFORMATION IN WRITING TO EACH ACCOUNT OWNER AND PROSPECTIVE ACCOUNT OWNER OF A PRE-PAID TUITION ACCOUNT: A. THE TERMS AND CONDITIONS FOR PURCHASING A PRE-PAID TUITION ACCOUNT; B. ANY RESTRICTIONS ON THE SUBSTITUTION OF BENEFICIARIES; C. THE PERSON OR ENTITY ENTITLED TO TERMINATE THE TUITION PRE-PAYMENT AGREEMENT; D. THE PERIOD OF TIME DURING WHICH A BENEFICIARY MAY RECEIVE BENEFITS UNDER THE TUITION PRE-PAYMENT AGREEMENT; E. THE TERMS AND CONDITIONS UNDER WHICH MONEY MAY BE WHOLLY OR PARTIALLY WITHDRAWN FROM THE PLAN, INCLUDING, BUT NOT LIMITED TO, ANY REASONABLE CHARGES AND FEES THAT MAY BE IMPOSED FOR WITHDRAWAL;S. 6698 6
F. THE PROBABLE TAX CONSEQUENCES ASSOCIATED WITH CONTRIBUTIONS TO AND DISTRIBUTIONS FROM ACCOUNTS; AND G. ALL OTHER RIGHTS AND OBLIGATIONS PURSUANT TO PRE-PAID TUITION AGREEMENTS, AND ANY OTHER TERMS, CONDITIONS AND PROVISIONS DEEMED NECES- SARY AND APPROPRIATE BY THE BOARD PURSUANT TO SECTION SIX HUNDRED NINE- TY-SIX-C OF THIS ARTICLE. 15. PRE-PAID TUITION SAVINGS AGREEMENTS SHALL BE SUBJECT TO SECTION FOURTEEN-C OF THE BANKING LAW AND THE "TRUTH-IN-SAVINGS" REGULATIONS PROMULGATED THEREUNDER. 16. NOTHING IN THIS ARTICLE OR IN ANY PRE-PAID TUITION SAVINGS AGREE- MENT ENTERED INTO PURSUANT TO THIS ARTICLE SHALL BE CONSTRUED AS A GUAR- ANTEE BY THE STATE OR ANY COLLEGE THAT A BENEFICIARY WILL BE ADMITTED TO A COLLEGE OR UNIVERSITY, OR, UPON ADMISSION TO A COLLEGE WILL BE PERMIT- TED TO CONTINUE TO ATTEND OR WILL RECEIVE A DEGREE FROM A COLLEGE OR UNIVERSITY. S 696-F. POWERS OF THE BOARD AND COMPTROLLER. 1. THE BOARD, IN CONSULTATION WITH THE COMPTROLLER, MAY SOLICIT PROPOSALS FROM FINANCIAL ORGANIZATIONS TO ACT AS DEPOSITORIES AND MANAG- ERS OF THE PLAN. FINANCIAL ORGANIZATIONS SUBMITTING PROPOSALS SHALL DESCRIBE THE INVESTMENT INSTRUMENT WHICH WILL BE HELD IN ACCOUNTS. THE BOARD SHALL SELECT AS PROGRAM DEPOSITORIES AND MANAGERS THE FINANCIAL ORGANIZATION, FROM AMONG THE BIDDING FINANCIAL ORGANIZATIONS THAT DEMON- STRATES THE MOST ADVANTAGEOUS COMBINATION, BOTH TO POTENTIAL PROGRAM PARTICIPANTS AND THIS STATE, OF THE FOLLOWING FACTORS: A. FINANCIAL STABILITY AND INTEGRITY OF THE FINANCIAL ORGANIZATION; B. THE SAFETY OF THE INVESTMENT INSTRUMENT BEING OFFERED; C. THE ABILITY OF THE INVESTMENT INSTRUMENT TO TRACK INCREASING COSTS OF HIGHER EDUCATION; D. THE ABILITY OF THE FINANCIAL ORGANIZATION TO SATISFY RECORDKEEPING AND REPORTING REQUIREMENTS; E. THE FINANCIAL ORGANIZATION'S PLAN FOR PROMOTING THE PLAN AND THE INVESTMENT IT IS WILLING TO MAKE TO PROMOTE THE PLAN; F. THE FEES, IF ANY, PROPOSED TO BE CHARGED TO PERSONS FOR OPENING ACCOUNTS; G. THE MINIMUM INITIAL DEPOSIT AND MINIMUM CONTRIBUTIONS THAT THE FINANCIAL ORGANIZATION WILL REQUIRE; H. THE ABILITY OF BANKING ORGANIZATIONS TO ACCEPT ELECTRONIC WITH- DRAWALS, INCLUDING PAYROLL DEDUCTION PLANS; AND I. OTHER BENEFITS TO THE STATE OR ITS RESIDENTS INCLUDED IN THE PROPOSAL, INCLUDING FEES PAYABLE TO THE STATE TO COVER EXPENSES OF OPER- ATION OF THE PROGRAM. 2. THE BOARD MAY ENTER INTO A CONTRACT WITH A FINANCIAL ORGANIZATION. SUCH FINANCIAL ORGANIZATION MANAGEMENT MAY PROVIDE ONE OR MORE TYPES OF INVESTMENT INSTRUMENT. 3. THE BOARD MAY SELECT MORE THAN ONE FINANCIAL ORGANIZATION FOR THE PLAN. 4. A MANAGEMENT CONTRACT SHALL INCLUDE, AT A MINIMUM, TERMS REQUIRING THE FINANCIAL ORGANIZATION TO: A. TAKE ANY ACTION REQUIRED TO KEEP THE PLAN IN COMPLIANCE WITH REQUIREMENTS OF THIS ARTICLE; B. KEEP ADEQUATE RECORDS OF EACH ACCOUNT, KEEP EACH ACCOUNT SEGREGATED FROM EACH OTHER ACCOUNT, AND PROVIDE THE BOARD WITH THE INFORMATION NECESSARY TO PREPARE THE STATEMENTS REQUIRED BY THIS ARTICLE; C. PROVIDE THE COMPTROLLER OR HIS OR HER DESIGNEE ACCESS TO THE BOOKS AND RECORDS OF THE PLAN MANAGER TO THE EXTENT NEEDED TO DETERMINE COMPLIANCE WITH THE CONTRACT;S. 6698 7
D. HOLD ALL ACCOUNTS FOR THE BENEFIT OF THE ACCOUNT OWNER; E. BE AUDITED AT LEAST ANNUALLY BY A FIRM OF CERTIFIED PUBLIC ACCOUNT- ANTS SELECTED BY THE COMPTROLLER AND THAT THE RESULTS OF SUCH AUDIT BE PROVIDED TO THE BOARD AND THE COMPTROLLER; F. PROVIDE THE BOARD AND THE COMPTROLLER WITH COPIES OF ALL REGULATORY FILINGS AND REPORTS MADE BY IT DURING THE TERM OF THE MANAGEMENT CONTRACT OR WHILE IT IS HOLDING ANY ACCOUNTS, OTHER THAN CONFIDENTIAL FILINGS OR REPORTS THAT WILL NOT BECOME PART OF THE PLAN. THE PLAN MANAGER SHALL MAKE AVAILABLE FOR REVIEW BY THE COMPTROLLER THE RESULTS OF ANY PERIODIC EXAMINATION OF SUCH MANAGER BY ANY STATE OR FEDERAL BANKING, INSURANCE OR SECURITIES COMMISSION, EXCEPT TO THE EXTENT THAT SUCH REPORT OR REPORTS MAY NOT BE DISCLOSED UNDER APPLICABLE LAW OR THE RULES OF SUCH COMMISSION; AND G. ENSURE THAT ANY DESCRIPTION OF THE PROGRAM, WHETHER IN WRITING OR THROUGH THE USE OF ANY MEDIA, IS CONSISTENT WITH THE MARKETING PLAN DEVELOPED IN THE MEMORANDUM OF UNDERSTANDING PURSUANT TO THE PROVISIONS OF SECTION SIX HUNDRED NINETY-FIVE-C OF THIS ARTICLE. 5. THE COMPTROLLER MAY PROVIDE THAT AN AUDIT SHALL BE CONDUCTED OF THE OPERATIONS AND FINANCIAL POSITION OF THE PLAN DEPOSITORY AND MANAGER AT ANY TIME IF THE BOARD OR THE COMPTROLLER HAS ANY REASON TO BE CONCERNED ABOUT THE FINANCIAL POSITION, THE RECORDKEEPING PRACTICES, OR THE STATUS OF ACCOUNTS OF SUCH PLAN DEPOSITORY AND MANAGER. 6. DURING THE TERM OF ANY CONTRACT WITH A PLAN MANAGER, THE COMP- TROLLER SHALL CONDUCT AN EXAMINATION OF SUCH MANAGER AND ITS HANDLING OF ACCOUNTS. SUCH EXAMINATION SHALL BE CONDUCTED AT LEAST BIENNIALLY IF SUCH MANAGER IS NOT OTHERWISE SUBJECT TO PERIODIC EXAMINATION BY THE SUPERINTENDENT OF FINANCIAL SERVICES, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR OTHER SIMILAR ENTITY. 7. A. IF SELECTION OF A FINANCIAL ORGANIZATION AS A PLAN MANAGER OR DEPOSITORY IS NOT RENEWED, AFTER THE END OF ITS TERM: (I) ACCOUNTS PREVIOUSLY ESTABLISHED AND HELD IN INVESTMENT INSTRUMENTS AT SUCH FINANCIAL ORGANIZATION MAY BE TERMINATED; (II) ADDITIONAL CONTRIBUTIONS MAY BE MADE TO SUCH ACCOUNTS; (III) NO NEW ACCOUNTS MAY BE PLACED WITH SUCH FINANCIAL ORGANIZATION; AND (IV) EXISTING ACCOUNTS HELD BY SUCH DEPOSITORY SHALL REMAIN SUBJECT TO ALL OVERSIGHT AND REPORTING REQUIREMENTS ESTABLISHED BY THE COMPTROLLER. B. IF THE COMPTROLLER TERMINATES A FINANCIAL ORGANIZATION AS A PLAN MANAGER OR DEPOSITORY, HE OR SHE SHALL TAKE CUSTODY OF ACCOUNTS HELD BY SUCH FINANCIAL ORGANIZATION AND SHALL SEEK TO PROMPTLY TRANSFER SUCH ACCOUNTS TO ANOTHER FINANCIAL ORGANIZATION THAT IS SELECTED AS A PLAN MANAGER OR DEPOSITORY AND INTO INVESTMENT INSTRUMENTS AS SIMILAR TO THE ORIGINAL INSTRUMENTS AS POSSIBLE. S 696-G. STATE GUARANTEE. 1. NOTHING IN THIS ARTICLE SHALL ESTABLISH OR BE DEEMED TO ESTABLISH ANY OBLIGATION OF THE STATE, THE COMPTROLLER OR ANY AGENCY OR INSTRUMENTALITY OF THE STATE TO GUARANTEE ANY BENEFITS TO ANY ACCOUNT OWNER OR DESIGNATED BENEFICIARY. 2. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS SECTION, IN ORDER TO ENSURE THAT THE PLAN IS ABLE TO MEET ITS OBLIGATIONS, THE GOVERNOR SHALL INCLUDE IN THE BUDGET SUBMITTED PURSUANT TO SECTION TWEN- TY-TWO OF THE STATE FINANCE LAW, AN APPROPRIATION SUFFICIENT FOR THE PURPOSE OF ENSURING THAT THE PLAN CAN MEET ITS OBLIGATIONS. ANY SUMS APPROPRIATED FOR SUCH PURPOSE SHALL BE TRANSFERRED TO THE PLAN. ALL AMOUNTS PAID INTO THE PLAN PURSUANT TO THIS SUBDIVISION SHALL CONSTITUTE AND BE ACCOUNTED FOR AS ADVANCES BY THE STATE TO THE PLAN AND, SUBJECT TO THE RIGHTS OF THE PLAN'S CONTRACT HOLDERS, SHALL BE REPAID TO THES. 6698 8
STATE WITHOUT INTEREST FROM AVAILABLE OPERATING REVENUE OF THE PLAN IN EXCESS OF AMOUNTS REQUIRED FOR THE PAYMENT OF THE OBLIGATIONS OF THE PLAN. AS USED IN THIS SECTION, "OBLIGATIONS OF THE PLAN" MEANS AMOUNTS REQUIRED FOR THE PAYMENT OF CONTRACT BENEFITS OR OTHER OBLIGATIONS OF THE PLAN, THE MAINTENANCE OF THE PLAN, AND OPERATING EXPENSES FOR THE CURRENT FISCAL YEAR. S 2. The state finance law is amended by adding a new section 78-c to read as follows: S 78-C. NEW YORK STATE PRE-PAID TUITION PLAN FUND. 1. THERE IS HEREBY ESTABLISHED IN THE SOLE CUSTODY OF THE STATE COMPTROLLER A SPECIAL FUND TO BE KNOWN AS THE NEW YORK STATE PRE-PAID TUITION PLAN FUND. ALL PAYMENTS FROM SUCH FUND SHALL BE MADE IN ACCORDANCE WITH ARTICLE FOUR- TEEN-B OF THE EDUCATION LAW. 2. (A) THE COMPTROLLER, WITH THE CONSENT OF THE PRE-PAID TUITION PLAN BOARD, SHALL INVEST THE ASSETS OF THE FUND IN INVESTMENTS AUTHORIZED BY ARTICLE FOUR-A OF THE RETIREMENT AND SOCIAL SECURITY LAW, PROVIDED HOWEVER, THAT: (I) THE PROVISIONS OF PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION ONE HUNDRED SEVENTY-SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW SHALL NOT APPLY EXCEPT FOR THE FIRST CLAUSE OF SUBPARAGRAPH (II) OF SUCH PARA- GRAPH; AND (II) NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION SEVEN OF SECTION ONE HUNDRED SEVENTY-SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW OR ANY OTHER LAW TO THE CONTRARY, THE ASSETS OF THE FUND MAY BE INVESTED IN ANY FUNDING AGREEMENT ISSUED IN ACCORDANCE WITH SECTION THREE THOUSAND TWO HUNDRED TWENTY-TWO OF THE INSURANCE LAW BY A DOMESTIC LIFE INSURANCE COMPANY OR A FOREIGN LIFE INSURANCE COMPANY DOING BUSINESS IN THIS STATE, SUBJECT TO THE FOLLOWING: (1) SUCH A FUNDING AGREEMENT MAY PROVIDE FOR A GUARANTEED MINIMUM RATE OF RETURN; (2) SUCH A FUNDING AGREEMENT MAY BE ALLOCATED AS EITHER A SEPARATE ACCOUNT OR A GENERAL ACCOUNT OF THE ISSUER, AS THE COMPTROLLER MAY DECIDE; (3) TOTAL INVESTMENTS OF THE FUND PURSUANT TO THIS PARAGRAPH IN ANY FUNDING AGREEMENTS ISSUED BY A SINGLE LIFE INSURANCE COMPANY WHICH ARE ALLOCATED AS A GENERAL ACCOUNT OF THE ISSUER SHALL NOT, IN THE AGGRE- GATE, EXCEED THREE HUNDRED FIFTY MILLION DOLLARS; AND (4) NO ASSETS OF THE FUND SHALL BE INVESTED IN ANY SUCH FUNDING AGREE- MENT UNLESS, AT THE TIME OF SUCH INVESTMENT, THE GENERAL OBLIGATIONS OR FINANCIAL STRENGTH OF THE ISSUER HAVE RECEIVED EITHER THE HIGHEST OR SECOND HIGHEST RATING BY TWO NATIONALLY RECOGNIZED RATING SERVICES OR BY ONE NATIONALLY RECOGNIZED RATING SERVICE IN THE EVENT THAT ONLY ONE SUCH SERVICE RATES SUCH OBLIGATIONS. (B) FUND ASSETS SHALL BE KEPT SEPARATE AND SHALL NOT BE COMMINGLED WITH OTHER ASSETS. THE PRE-PAID TUITION PLAN BOARD MAY ENTER INTO CONTRACTS TO PROVIDE FOR INVESTMENT ADVICE AND MANAGEMENT, CUSTODIAL SERVICES AND OTHER PROFESSIONAL SERVICES FOR THE ADMINISTRATION AND INVESTMENT OF THE PLAN. ADMINISTRATIVE FEES, COSTS AND EXPENSES, INCLUD- ING INVESTMENT FEES AND EXPENSES, SHALL BE PAID FROM THE ASSETS OF THE FUND. 3. THE COMPTROLLER SHALL PROVIDE FOR THE ADMINISTRATION OF THE TRUST FUND, INCLUDING MAINTAINING PARTICIPANT RECORDS AND ACCOUNTS, AND PROVIDING ANNUAL AUDITED REPORTS. THE COMPTROLLER MAY ENTER INTO CONTRACTS TO PROVIDE ADMINISTRATIVE SERVICES AND REPORTING. S 3. Section 5205 of the civil practice law and rules is amended by adding a new subdivision (p) to read as follows:S. 6698 9
(P) EXEMPTION FOR NEW YORK STATE PRE-PAID TUITION PLAN MONIES. MONIES IN AN ACCOUNT CREATED PURSUANT TO ARTICLE FOURTEEN-B OF THE EDUCATION LAW ARE EXEMPT FROM APPLICATION TO THE SATISFACTION OF A MONEY JUDGMENT AS FOLLOWS: 1. ONE HUNDRED PERCENT OF MONIES IN AN ACCOUNT IN CONNECTION WITH A PRE-PAID TUITION PLAN ESTABLISHED PURSUANT TO SUCH ARTICLE IS EXEMPT; AND 2. ONE HUNDRED PERCENT OF MONIES IN AN ACCOUNT IS EXEMPT WHERE THE JUDGMENT DEBTOR IS THE ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF SUCH ACCOUNT. FOR THE PURPOSES OF THIS SUBDIVISION, THE TERMS "ACCOUNT OWNER" AND "DESIGNATED BENEFICIARY" SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN ARTICLE FOURTEEN-B OF THE EDUCATION LAW. S 4. Subparagraph (A) of paragraph 2 of subsection (t) of section 606 of the tax law, as amended by section 1 of part N of chapter 85 of the laws of 2002, is amended to read as follows: (A) The term "allowable college tuition expenses" shall mean the amount of qualified college tuition expenses of eligible students paid by the taxpayer during the taxable year, limited to
[ten]TWENTY thou- sand dollars for each such student; S 5. Paragraph 34 of subsection (b) of section 612 of the tax law, as amended by chapter 535 of the laws of 2000, subparagraph (B) as amended by chapter 593 of the laws of 2003, is amended to read as follows: (34) (A) Excess distributions received during the taxable year by a distributee of a family tuition account established under the New York state college choice tuition savings program provided for under article fourteen-A of the education law, OR OF A PRE-PAID TUITION ACCOUNT ESTAB- LISHED PURSUANT TO ARTICLE FOURTEEN-B OF THE EDUCATION LAW, to the extent such excess distributions are deemed attributable to deductible contributions under paragraph thirty-two of subsection (c) of this section. (B) (i) The term "excess distributions" means distributions which are not (I) qualified withdrawals within the meaning of subdivision nine of section six hundred ninety-five-b OR SUBDIVISION FIFTEEN OF SECTION SIX HUNDRED NINETY-SIX-A of the education law; (II) withdrawals made as a result of the death or disability of the designated beneficiary within the meaning of subdivision ten of section six hundred ninety-five-b OR SUBDIVISION TWELVE OF SECTION SIX HUNDRED NINETY-SIX-A of such law; or (III) transfers described in paragraph b of subdivision six of section six hundred ninety-five-e of such law. (ii) Excess distributions shall be deemed attributable to deductible contributions to the extent the amount of any such excess distribution, when added to all previous excess distributions from the account, exceeds the aggregate of all nondeductible contributions to the account. S 6. Paragraphs 32 and 33 of subsection (c) of section 612 of the tax law, paragraph 32 as amended by chapter 81 of the laws of 2008 and para- graph 33 as added by chapter 546 of the laws of 1997, are amended to read as follows: (32) Contributions made during the taxable year by an account owner to one or more family tuition accounts established under the New York state college choice tuition savings program provided for under article four- teen-A, OR TO A PRE-PAID TUITION ACCOUNT PURSUANT TO ARTICLE FOURTEEN-B of the education law, to the extent not deductible or eligible for cred- it for federal income tax purposes, provided, however, the exclusionS. 6698 10
provided for in this paragraph shall not exceed
[five]TEN thousand dollars for an individual or head of household, and for married couples who file joint tax returns, shall not exceed [ten]TWENTY thousand dollars; provided, further, that such exclusion shall be available only to the account owner and not to any other person. (33) Distributions from a family tuition account established under the New York state college choice tuition savings program provided for under article fourteen-A, OR FROM A PRE-PAID TUITION ACCOUNT PURSUANT TO ARTI- CLE FOURTEEN-B of the education law, to the extent includible in gross income for federal income tax purposes. S 7. This act shall take effect immediately and shall apply to taxable years commencing after December 31, 2014.