Contributions And Withdrawals

(1) Contributions. (a) Purchaser contributions to the Matching grant incentive program shall be made in accordance with Rule 1700-05-04-.04 by those Purchasers who qualify for participation in the program for a Beneficiary or Beneficiaries. Purchaser contributions will be subject to the limitations established in Rule 1700-05-04-.04. (b) Matching contributions shall be made by the Board for each Beneficiary but shall be maintained in a Matching contribution account separate from the Account that contains the Purchaser’s contributions. COLLEGE SAVINGS INCENTIVE PLAN CHAPTER 1700-05-03 (2) Withdrawals. (a) Eligibility, Written Request, Amount and Timing of Withdrawals. A Purchaser may request a Withdrawal from the Account and Matching contribution account if the contributions and Matching contributions have been on deposit for a period of time consistent with the deposit period contained in Tenn. Comp. R & Regs. 1700-05-04- .06(1). The Purchaser’s Withdrawal of contributions and Matching contributions are subject to the requirements contained in Rule 1700-05-04-.06(1), (2) and (3). (b) Withdrawals for Qualified Higher Education Expenses. The Purchaser may use either Purchaser contributions or the Matching contributions to pay for Qualified higher education expenses by directing payment to the Purchaser, the Beneficiary, or an Eligible educational institution as an advance payment or as reimbursement for Qualified higher education expenses. Third party documentation to substantiate the request may be required unless otherwise provided for in § 529 of the Internal Revenue Code or the regulations promulgated thereunder. (c) Withdrawals for Non-Qualified Higher Education Expenses. The Purchaser may only use Account contributions, and not Matching contributions, to pay for non-Qualified higher education expenses, provided that the Account contributions have been on deposit in the Account for a period of time consistent with the deposit period contained in Tenn. Comp. R & Regs. 1700-05-04-.06(1). Such a Withdrawal may be made without causing termination of the Contract and without requiring the Purchaser to establish that the withdrawal of the Account contributions will be used for Qualified higher education expenses. The earnings portion of withdrawals made for non- Qualified higher education expenses could be subject to federal taxation as prescribed under the sections of the Internal Revenue Code and the regulations promulgated thereunder that are applicable to the program. (d) Scholarship Refund. A Purchaser may request a Withdrawal of all or a portion of the Account contributions as a scholarship refund in accordance with the requirements contained in Tenn. Comp. R & Regs. 1700-05-04-.06(4)(c). A Purchaser may not request a Withdrawal of all or a portion of the Matching contribution account as a scholarship refund. (e) Contract Termination and Refund. A Purchaser may terminate a Contract for an Account as provided in Rule 1700-05-04-.06(4)(a)–(f) and receive a refund in accordance with Rule 1700-05-04-.06(4)(a)–(f). In the event that a Contract for an Account is terminated due to the Permanent disability or death of the Beneficiary, the Matching contributions will revert back to the Board. In the event the Contract for an Account is terminated for any other reason or purpose other than Permanent disability or death of the Beneficiary, Matching contributions may be used for Qualified higher education expenses, unless the Matching contribution account is inactive in accordance with subparagraph (g) of this rule. (f) Rollovers out of the Program. The Purchaser may rollover all or a portion of the Redemption Value of the Account to an account established for another Beneficiary under the qualified tuition program established under § 529 of the Internal Revenue Code by making a rollover request to the Board on such forms as may be prescribed by the Board. If the rollover is for the benefit of another Beneficiary, the Beneficiary to whose Account the funds are being transferred must be a Member of the family of the original Beneficiary. Any rollover under this Rule shall be administered in accordance with the applicable rollover provisions of the Internal Revenue Code. Any rollover made under this paragraph shall be equal to the amount requested, not to exceed the Redemption Value of the Account and any applicable fees charged by the Board. The COLLEGE SAVINGS INCENTIVE PLAN CHAPTER 1700-05-03 Redemption value of the Account shall be determined as of the date the rollover is made. Rollover of any funds in the Matching contribution account is not permitted. (g) Inactivity and Return of Matching contributions. Matching contributions will be returned to the Board if: 1. A period of ten (10) consecutive years passes with no contributions or Withdrawals having been made to or from a Beneficiary’s Matching contribution account or with no correspondence from the Purchaser or Beneficiary. The ten (10)-year period shall not commence any earlier than the year the Beneficiary becomes eighteen (18) years of age; or 2. The Purchaser voluntarily sends the Matching contributions back to the State at any time prior to the expiration of the ten (10)-year period contained in this subparagraph.