71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
House Bill 2124
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of State Treasurer Jim Hill)
CHAPTER ................
AN ACT
Relating to the Oregon Qualified Tuition Savings Program;
creating new provisions; amending ORS 23.166, 348.841, 348.844,
348.857, 348.863 and 348.867; and prescribing an effective
date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 348.841 is amended to read:
348.841. As used in ORS 348.841 to 348.873:
(1) 'Account' means an individual trust account or savings
account established in accordance with ORS 348.841 to 348.873.
(2) 'Account owner' means the { - individual or individuals,
other than the designated beneficiary identified at the time the
account is opened, who have - } { + person who has + } the
right to withdraw funds from the account { + . The account owner
+ } { + may also be the designated beneficiary of the
account + }.
(3) 'Board' means the Oregon Qualified Tuition Savings Board.
(4) 'Designated beneficiary' means, except as provided in ORS
348.867, 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 the
designated beneficiary is replaced in accordance with ORS
348.867, the 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 section 529(e)(5) of the Internal
Revenue Code.
(7) 'Internal Revenue Code' means the federal Internal Revenue
Code, as amended and in effect for the tax year of the taxpayer
for whom the inclusion or exclusion of income from federal
taxable income is being determined, in whole or part, under ORS
348.841 to 348.873.
(8) 'Member of the family' shall have the same meaning as
contained in section 529(e) of the Internal Revenue Code.
(9) 'Nonqualified withdrawal' means a withdrawal from an
account that is not:
(a) A qualified withdrawal;
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(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, allowance
or payment described in section 135(d)(1)(B) or (C) of the
Internal Revenue Code that is received by the designated
beneficiary, but only to the extent of the amount of the
scholarship, allowance, or payment; or
(d) A rollover or change in the designated beneficiary
described in ORS 348.867.
(10) 'Program' means the Oregon Qualified Tuition Savings
Program established under ORS 348.841 to 348.873.
(11) 'Qualified higher education expenses' means tuition and
other permitted expenses as set forth in section 529(e) of the
Internal Revenue Code for the enrollment or attendance of a
designated beneficiary at a higher education institution.
(12) '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 also made in
accordance with the requirements of ORS 348.870.
SECTION 2. ORS 348.844 is amended to read:
348.844. It is the intent of the Legislative Assembly, in
enacting ORS 348.841 to 348.873, to create a higher education
tuition savings program:
(1) That increases the ability of families and individuals to
save for higher education.
(2) In which the earnings on contributions of program
participants are exempt from both federal and state income
taxation until the moneys are withdrawn by the beneficiary for
higher education expenses.
(3) In which qualified withdrawals are subject to tax at the
rate applicable to the beneficiary's income bracket for both
federal and state income tax purposes.
(4) That utilizes the private sector to administer and invest
the contributions to the program under the guidance of the Oregon
Qualified Tuition Savings Board.
{ + (5) In which the contributions and earnings are held by
the program in trust for the benefit of designated beneficiaries
and account owners for the uses and purposes set forth in ORS
348.841 to 348.873, and for no other benefit, use or purpose. + }
SECTION 3. { + Section 4 of this 2001 Act is added to and made
a part of ORS 348.841 to 348.873. + }
SECTION 4. { + The State of Oregon has no proprietary interest
in the contributions or earnings of the Oregon Qualified Tuition
Savings Program. Except as otherwise provided by law, the Oregon
Qualified Tuition Savings Board is the trustee of the
contributions and earnings. + }
SECTION 5. ORS 348.857 is amended to read:
348.857. (1) An account owner may establish an account by
making an initial contribution to the Oregon Qualified Tuition
Savings Program in the name of the designated beneficiary.
{ - At the time of the initial contribution, either the account
owner or designated beneficiary must be a resident of this state
as defined by the Oregon Qualified Tuition Savings Board. - }
Once a contribution is made it becomes part of the program and
subject to the provisions of ORS 348.841 to 348.873.
(2) Any person may make a contribution to an account once an
account is opened.
(3) Contributions to an account shall be made only in cash.
(4) Total contributions to all accounts established on behalf
of a particular beneficiary may not exceed those reasonably
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necessary, considering the return on contributions, the age and
circumstances of the designated beneficiary, to provide for the
qualified higher education expenses of the designated
beneficiary. The board shall establish maximum contribution
limits applicable to program accounts and shall require the
provision of any information from the account owner and the
designated beneficiary as is necessary to establish the limit as
it relates to such account.
(5) Separate records and accounting shall be required for each
account and reports shall be made no less frequently than
annually to the account owner and the designated beneficiary.
(6) The board { - shall be permitted to - } { + may + }
collect application, account or administrative fees to defray the
costs of the program.
SECTION 6. ORS 348.863 is amended to read:
348.863. (1) An account and any interest in an account may not
be assignable or pledged or otherwise used to secure or obtain a
loan or other advancement.
{ + (2) The right of a designated beneficiary to the payment
of qualified higher education expenses or of an account owner to
a withdrawal, payments and withdrawals made in exercise of those
rights and moneys or property held within an account shall be
exempt from garnishment and may not be subject to execution,
attachment or any other process or to the operation of any
bankruptcy or insolvency law. + }
{ - (2) - } { + (3) + } A refund of a qualified educational
expense payment may not 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 program for credit to the
designated beneficiary's account.
{ - (3) - } { + (4) + } A qualified withdrawal that is used
to pay for qualified { + higher + } 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. - } { + as prescribed by
rules adopted by the Oregon Qualified Tuition Savings Board. The
board may by rule establish, among other matters:
(a) Requirements for proof that the moneys involved in a
qualified withdrawal are to be used only to pay qualified higher
education expenses;
(b) Procedures and conditions for qualified withdrawals; and
(c) The parties that may receive payment of moneys that are the
subject of qualified withdrawals. + }
{ - (4) - } { + (5) + } 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.
SECTION 7. ORS 348.867 is amended to read:
348.867. (1) 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.
(2) 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.
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(3) The right to change the designated beneficiary or to
transfer between accounts contained in subsections (1) and (2) of
this section may be denied if, under rules adopted by the Oregon
Qualified Tuition Savings 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.
{ + (4) Individual account information, including but not
limited to names, addresses, telephone numbers, personal
identification information, amounts contributed and earnings on
amounts contributed, is confidential and must be maintained as
confidential:
(a) Except to the extent necessary to administer the Oregon
Qualified Tuition Savings Program in a manner consistent with ORS
348.841 to 348.873, Oregon tax laws and the Internal Revenue
Code; or
(b) Unless the person who provides the information or is the
subject of the information expressly agrees in writing that the
information may be disclosed. + }
SECTION 8. { + Section 4 of this 2001 Act and the amendments
to ORS 348.841, 348.844, 348.857, 348.863 and 348.867 by sections
1, 2 and 5 to 7 of this 2001 Act apply to Oregon Qualified
Tuition Savings Program accounts established on or after January
1, 2001, and to actions of the Oregon Qualified Tuition Savings
Board taken on or after January 1, 2001. + }
SECTION 9. ORS 23.166 is amended to read:
23.166. (1) All funds exempt from execution and other process
under ORS 23.170, 23.185 (1)(b), (c), (d) and (e), 238.445,
344.580, { + 348.863, + } 401.405, 407.595, 411.760, 412.115,
412.610, 413.130, 414.095, 655.530, 656.234, 657.855 and 748.207
and section 3101, title 38, United States Code and section 407,
title 42, United States Code shall remain exempt when deposited
in an account of a judgment debtor as long as the exempt funds
are identifiable.
(2) The provisions of subsection (1) of this section shall not
apply to any accumulation of funds greater than $7,500.
SECTION 10. { + This 2001 Act takes effect on the 91st day
after the date on which the regular session of the Seventy-first
Legislative Assembly adjourns sine die. + }
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Passed by House January 31, 2001
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate March 1, 2001
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President of Senate
Enrolled House Bill 2124 (HB 2124-INTRO) Page 4
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
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Secretary of State
Enrolled House Bill 2124 (HB 2124-INTRO) Page 5