2002 Minnesota Statutes

     136G.09 Plan accounts; generally. 

    Subdivision 1.    Contributions to an account.  A person 
 may make contributions to an account on behalf of a beneficiary. 
 Contributions to an account made by persons other than the 
 account owner become the property of the account owner.  A 
 person does not acquire an interest in an account by making 
 contributions to an account.  Contributions to an account must 
 be made by check, money order, or other commercially acceptable 
 means as permitted by the United States Internal Revenue Service 
 and authorized by the plan administrator in cooperation with the 
 office and the board. 

    Subd. 2.    Authority of account owner.  An account 
 owner is the only person entitled to: 

    (1) select or change a beneficiary or a contingent account 
 owner; or 

    (2) request distributions or rollover distributions from an 
 account. 

    Subd. 3.    Security for loans.  An interest in an 
 account or matching grant account must not be used as security 
 for a loan. 

    Subd. 4.    Separate accounting.  The plan must provide 
 a separate account for each beneficiary for whom contributions 
 are made.  Each account must have a single account owner and a 
 single beneficiary.  An account owner must not open more than 
 one account for the same beneficiary, but several account owners 
 may open accounts for the same beneficiary. 

    Subd. 5.    Naming of beneficiary.  The account owner 
 must designate the beneficiary of an account when the account is 
 established, except for accounts established under section 
 529(e)(1)(C) of the Internal Revenue Code, which do not require 
 a designated beneficiary until a distribution is made. 

    Subd. 6.    Change of beneficiary.  An account owner may 
 change the beneficiary of an account to a member of the family 
 of the current beneficiary, at any time without penalty, if the 
 change will not cause the total account balance of all accounts 
 held for the new beneficiary to exceed the maximum account 
 balance limit as provided in subdivision 8.  A change of 
 beneficiary other than as permitted in this subdivision is 
 treated as a nonqualified distribution under section 136G.13, 
 subdivision 3. 

    Subd. 7.    Change of account ownership.  An account 
 owner may transfer ownership of an account to another person 
 eligible to be an account owner.  All transfers of ownership are 
 absolute and irrevocable. 

    Subd. 8.    Maximum account balance limit.  (a) When a 
 contribution is made, the total account balance of all accounts 
 held for the same beneficiary, including matching grant 
 accounts, must not exceed the maximum account balance limit as 
 determined under this subdivision. 

    (b) The maximum account balance limit is reduced for 
 withdrawals from any account for the same beneficiary that are 
 qualified distributions, distributions due to the death or 
 disability of the beneficiary, or distributions due to the 
 beneficiary receiving a scholarship.  Subsequent contributions 
 must not be made to replenish an account if the contribution 
 results in the total account balance of all accounts held for 
 the beneficiary to exceed the reduced maximum account balance 
 limit.  Any subsequent contributions must be rejected.  A 
 subsequent contribution accepted in error must be returned to 
 the account owner plus any earnings on the contribution less any 
 applicable penalties. 

    (c) The maximum account balance limit is not reduced for a 
 nonqualified distribution or a rollover distribution.  When such 
 distributions are taken, subsequent contributions may be made to 
 replenish an account up to the maximum account balance limit. 

    (d) The office must establish a maximum account balance 
 limit.  The office must adjust the maximum account balance 
 limit, as necessary, or on January 1 of each year.  The maximum 
 account balance limit must not exceed the amount permitted for 
 the plan to qualify as a qualified state tuition program under 
 section 529 of the Internal Revenue Code.  For calendar years 
 2002 and 2003, the maximum account balance is $235,000. 

    (e) If the total account balance of all accounts held for a 
 single beneficiary reaches the maximum account balance limit 
 prior to the end of that calendar year, the beneficiary may 
 receive an applicable matching grant for that calendar year. 

    Subd. 9.    Excess contributions and balances.  A 
 contribution to any account for a beneficiary must be rejected 
 if the contribution would cause the total account balance of all 
 accounts held for the same beneficiary, including the matching 
 grant account, to exceed the maximum account balance limit under 
 section 529 of the Internal Revenue Code as established by the 
 office.  If a contribution under this subdivision is accepted in 
 error, the contribution must be returned to the account owner 
 plus any earnings thereon, less applicable penalties.  A payment 
 of an excess contribution to the account owner may be a 
 nonqualified distribution subject to a penalty. 

    Subd. 10.    Dormant accounts.  (a) The plan 
 administrator shall attempt to locate the account owner or the 
 beneficiary, or both, to determine the disposition of a dormant 
 account.  A fee of five percent of the total account balance of 
 the dormant account, not to exceed $100, plus allowable costs, 
 may be charged for this service.  Costs will not exceed $100 or 
 five percent of the total account balance in the dormant 
 account, whichever is less. 

    (b) If the account owner, or the account owner's legal 
 heirs, are not found after three attempts by the plan 
 administrator, the remaining funds in the dormant account must 
 be turned over to the office.  The funds are treated as 
 unclaimed property for purposes of sections 345.31 to 345.60, 
 and the office shall turn all remaining dormant account funds 
 over to the commissioner of commerce.  If the dormant account 
 has a matching grant account, all amounts in the beneficiary's 
 matching grant account, if any, must be returned to the office. 

    Subd. 11.    Effect of plan changes on participation 
 agreement.  Amendments to sections 136G.01 to 136G.13 
 automatically amend the participation agreement.  Any amendments 
 to the operating procedures and policies of the plan shall amend 
 the participation agreement 30 days after adoption by the office 
 or the board. 

    Subd. 12.    Special account to hold plan assets in trust. 
  All assets of the plan, including contributions to accounts 
 and matching grant accounts and earnings, are held in trust for 
 the exclusive benefit of account owners and beneficiaries.  
 Assets must be held in a separate account in the state treasury 
 to be known as the Minnesota college savings plan account.  Plan 
 assets are not subject to claims by creditors of the state, are 
 not part of the general fund, and are not subject to 
 appropriation by the state.  Payments from the Minnesota college 
 savings plan account shall be made under sections 136G.01 to 
 136G.13. 

    HIST: 1Sp2001 c 1 art 3 s 12,23; 2002 c 220 art 5 s 10