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Current Status Bill Number:View additional legislative information at the LPITS web site.632 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:20010426 Primary Sponsor:Rankin All Sponsors:Rankin Drafted Document Number:l:\s-res\lar\001tuit.mrh.doc Residing Body:Senate Current Committee:Education Committee 04 SED Subject:Tuition Savings Program Act, regulations established; financial report and tax provisions; Colleges and Universities History Body Date Action Description Com Leg Involved ______ ________ ______________________________________ _______ ____________ Senate 20010426 Introduced, read first time, 04 SED referred to Committee Versions of This Bill
TO AMEND TITLE 59, CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 8 SO AS TO ENACT THE "SOUTH CAROLINA TUITION SAVINGS PROGRAM ACT"; TO PROVIDE FOR A TUITION SAVINGS PROGRAM IN COMPLIANCE WITH SECTION 529 OF THE INTERNAL REVENUE CODE; TO PROVIDE CERTAIN DEFINITIONS; TO PROVIDE FOR A DIRECTOR OF THE PROGRAM AND THE ESTABLISHMENT OF REGULATIONS TO ESTABLISH AND MAINTAIN THE PROGRAM; TO PROVIDE FOR COOPERATION AND ASSISTANCE TO THE PROGRAM BY ALL STATE AGENCIES; TO PROVIDE FOR AN ANNUAL FINANCIAL REPORT OF THE PROGRAM; TO PROVIDE CERTAIN STATE TAX PROVISIONS; AND TO PROVIDE THAT MONEYS INVESTED IN A PLAN SHALL NOT BE CONSIDERED AN ASSET FOR DETERMINATION OF FINANCIAL AID.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 59 of the 1976 Code is amended by adding:
Section 59-8-10. This chapter may be cited as the `South Carolina Tuition Savings Program Act'. The South Carolina Tuition Savings Program is established to assist the citizens of South Carolina with the expense of college by establishing a qualified state tuition program in conformity with Section 529 of the Internal Revenue Code. This chapter shall be liberally construed in order to effectuate the purposes and intent of this chapter. Furthermore, it is intended that the tuition savings program established pursuant to this chapter qualify as a `qualified state tuition program' pursuant to Section 529 of the Internal Revenue Code. As such, the provisions of this chapter shall be construed wherever possible to effectuate this intent.
Section 59-8-20. As used in this chapter:
(1) `College or university' means an educational institution of higher learning located in this State or any other state in the United States.
(2) `Contributor' means a person who makes payments to a South Carolina tuition savings plan.
(3) `Designated beneficiary' means the individual who is designated as the beneficiary of amounts paid or to be paid to the South Carolina Tuition Savings Program or, in the case of a change in beneficiaries as permitted under this chapter, the individual who is the new beneficiary.
(4) `Director' means the head of the South Carolina Tuition Savings Program
(5) `Independent institution of higher education' means an independent eleemosynary junior or senior college in whose major campus and headquarters are located within South Carolina or any other state within the United States accredited by the Southern Association of Colleges and Secondary Schools or any other generally accepted national or regional accreditation association.
(6) `Program' means the South Carolina Tuition Savings Program.
(7) `Treasurer' means the South Carolina State Treasurer.
(8) `Tuition' means the credit-hour charges imposed by a public higher education institution in this State or any other state and all mandatory fees required as a condition of enrollment of all students.
(9) `Tuition savings plan' means a plan approved by the director of the South Carolina Tuition Savings Program and the treasurer providing for the investment of funds in a manner effectuating the provisions of this chapter and operating in compliance with Section 529 of the Internal Revenue Code.
Section 59-8-30. (A) The South Carolina Tuition Savings Program is created as a program within the Office of the State Treasurer. The chief administrative and operating official for the program is the director who must be appointed and supervised by the treasurer. The director must be a state official or employee.
(B) The treasurer is responsible for establishing and maintaining a qualified state tuition program pursuant to Section 529 of the Internal Revenue Code. The treasurer shall promulgate regulations in accordance with the Administrative Procedures Act for the establishment and maintenance of the program, consistent with the provisions of this chapter and the requirements of Section 529 of the Internal Revenue Code. These regulations must be developed in consultation with the chairmen or their designees of the Senate Finance Committee, the Senate Education Committee, the House Ways and Means Committee, and the House Education and Public Works Committee, and specifically provide the following:
(1) designate the specific tuition savings plan to be offered and entity to manage the plan. In designating an entity to manage the fund, the treasurer and shall take into consideration the performance history of the entity and the proposed fees to be charged for performance of services;
(2) allow for participation in the program by any citizen of any state in the United States;
(3) a maximum of one and one-half percent of the total of annual contributions to be charged as fees for any tuition savings plan; and
(4) a maximum lifetime contribution of $175,000.00 for any contributor to any tuition savings plan.
These regulations shall be submitted in sufficient time for the General Assembly to begin its approval process by January 15, 2002. It is the intent of the General Assembly to have these regulations in force so that the program may begin by July 1, 2002.
Section 59-8-40. All of the agencies, departments, and institutions of higher learning of the State must provide reasonable cooperation and assistance to the treasurer and the director in the establishment and maintenance of the program under this chapter.
Section 59-8-50. Upon implementation of the program, the director or his designee shall prepare an annual financial report of the program. This report must be submitted to the treasurer on the date and in the format prescribed by the treasurer and a copy forwarded to the chairmen of the Senate Finance Committee, the Senate Education Committee, the House Ways and Means Committee, and the House Education and Public Works Committee. The program is also subject to audit by the State Auditor or his designee. The director or his designee annually shall evaluate the actuarial soundness of the program and report this information to the treasurer.
Section 59-8-60. For state tax purposes:
(A) The annual contributions to a tuition savings plan shall be deductible from the gross income of the contributor and the annual earnings on the tuition savings plan shall not be includible in the gross income of either contributors or beneficiaries until distributed.
(B) At the time of distribution to a beneficiary, annual earnings of a tuition savings plan shall be includible in the gross income of the beneficiary.
(C) Any distribution to the contributor or beneficiary, including as a result of cancellation of a tuition savings plan, used for any purpose other than the payment of qualified higher education expenses as defined in Section 529(e)(3) of the Internal Revenue Code shall be includible in the gross income of the contributor or beneficiary to whom the funds are distributed to the extent the amount distributed exceeds the pro rata amount of contributions. An additional ten percent penalty must be assessed by the state treasurer to any such distribution to the extent the amount distributed exceeds the pro rata amount of contributions.
(D) Any funds remaining in a contributor's account after a beneficiary graduates from an institution of higher learning distributed to the contributor must be included in the contributor's gross income to the extent the amount distributed exceeds the pro rata amount of contributions.
(E) Any change in the designated beneficiary of a tuition savings plan shall not qualify as a distribution under this section if the new beneficiary is a member of the family of the contributor.
(F) The provisions of subsections (B), (C), and (D) shall not apply to that portion of any distribution which, within sixty days of distribution, is transferred to the credit of another designated beneficiary under a qualified state tuition plan who is a member of the family of the contributor.
Section 59-8-70. Notwithstanding any other provision of law, no moneys invested in a tuition savings plan shall be considered to be an asset for purposes of determining an individual's eligibility for a need-based grant, need-based scholarship, or need-based work opportunity offered by this State or an educational institution in this State."
SECTION 2. This act takes effect upon approval by the Governor.
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