R 390.1810 Terminations by trust upon actuarial unsoundness.

Rule 10. An actuarial review of a plan shall be made on an annual basis.If a determination is made for the trust by a nationally recognized actuary that the plan is not actuarially sound and if the trust determines there are insufficient numbers of new purchasers to insure the actuarial soundness of the plan, the trust shall terminate all contracts in the plan. Upon termination pursuant to the provisions of this rule, the trust shall cease all payments from the plan and pay refunds to the persons specified in the contracts to receive refunds upon termination if the refunds are not directed to a higher education institution. The amount of the refunds shall be as follows: (a) If funds are being held in an escrow account, funds in the escrow account will be transferred to the third-party lender in an amount necessary to repay the principal and accrued, but unpaid, interest due on the secured loan. Any funds remaining in the escrow account after this transfer will be transferred into the tuition account. (b) The trust will then calculate the asset value for each contract in the same plan by adding the application fee, any contract processing fee paid to or authorized by the trust, and 1 of the following, less the value of any educational benefits or refunds previously received: (i) The amount transferred to the tuition account pursuant to the provisions of subdivision (a) of this rule. (ii) The prepaid tuition amount plus any investment income for a contract purchased without a secured loan. (iii) The prepaid tuition amount and any investment income for a contract where a secured loan has been previously paid and the money has been transferred to the tuition account pursuant to the contract. (c) The person entitled to a refund under this rule will receive a refund which is a percentage of the amount of the total plan assets after liquidating all of the plan investments. The percentage is determined by dividing the asset value of a contract by the asset value of all contracts within the same plan. (d) The refund under this rule shall, at the option of the person entitled to receive the refund, either be applied toward the purposes of the contract for the respective beneficiary or paid to the person entitled to receive the refund upon termination.