Louisiana Revised Statutes 17:3100.5 – Education savings accounts; types, use, limitations, and disclosures
Terms Used In Louisiana Revised Statutes 17:3100.5
- Authority: means the Louisiana Tuition Trust Authority. See Louisiana Revised Statutes 17:3100.2
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Beneficiary: means a person designated in an education savings account owner's agreement, or by the authority when authorized by an account owner meeting the classification requirements of Louisiana Revised Statutes 17:3100.2
- Education savings account: is a savings account established by an individual, a group of individuals, or an organization pursuant to the program created by this Chapter for a beneficiary. See Louisiana Revised Statutes 17:3100.2
- Elementary or secondary school: means a public or approved nonpublic elementary or secondary school in Louisiana that contains any of the grades kindergarten through twelve. See Louisiana Revised Statutes 17:3100.2
- Fixed earnings: means the placement of all the deposits in an education savings account and the interest earned thereon in investments with fixed earnings. See Louisiana Revised Statutes 17:3100.2
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
- Redemption value: means the cash value of the education savings account attributable to the sum of the principal invested and the interest earned on principal and authorized to be credited to the account by the authority less any fees due and imposed by rule of the authority. See Louisiana Revised Statutes 17:3100.2
- Trade date: means the date that a deposit to an investment option that includes variable earnings is assigned a value in units, the date a disbursement or refund from an investment option that includes variable earnings is assigned a value, or the date a change in investment options that includes variable earnings is assigned a value, whichever is applicable. See Louisiana Revised Statutes 17:3100.2
- Tuition: means the expenses for tuition in connection with enrollment or attendance at an elementary or secondary school, as delineated by the authority. See Louisiana Revised Statutes 17:3100.2
- Variable earnings: means that portion of funds in an education savings account invested in equities. See Louisiana Revised Statutes 17:3100.2
- Variable Earnings Transaction Fund: means the subaccount established by the state treasurer within the Tuition and Savings Fund to receive earnings funds as described in Louisiana Revised Statutes 17:3100.2
A.(1)(a) The authority may enter into an account owner’s agreement with any person who qualifies pursuant to La. Rev. Stat. 17:3100.6(A) for the creation of an education savings account on behalf of a beneficiary. When the number of available agreements is limited, preference shall be given to the establishment of account owner agreements with resident account owners who are establishing accounts for resident beneficiaries.
(b) For tax years beginning on and after January 1, 2022, amounts that an account owner deposits into an education savings account shall be exempt from inclusion in the account owner’s taxable income for the purposes of state individual income tax up to a maximum of one thousand two hundred dollars per beneficiary per taxable year for account owners filing single returns and up to a maximum of two thousand four hundred dollars per beneficiary per taxable year for account owners filing joint returns, as provided in La. Rev. Stat. 47:293(9)(a)(xxv). If an account owner deposits less than the maximum one thousand two hundred dollars per year in an owned account and files a single return or if married account owners deposit less than the maximum of two thousand four hundred dollars per year in an account or accounts for a beneficiary and file a joint return, the difference between the total deposits and one thousand two hundred dollars or two thousand four hundred dollars, respectively, shall roll over to subsequent years and shall be exempt from inclusion in the account owner’s taxable income for the purposes of state income tax in addition to the one thousand two hundred dollars or two thousand four hundred dollars in the year actually deposited, as provided in La. Rev. Stat. 47:293(9)(a)(xxv).
(c) The deduction provided for in Subparagraph (b) of this Paragraph shall not be allowed for any deposits that are withdrawn within the same taxable year as the deposit.
(2) Disbursements from an education savings account shall be made from the account to the account owner, beneficiary, or elementary or secondary school, as directed by the account owner, for the qualified education expenses of the beneficiary not to exceed the redemption value of the account. The amount of all disbursements from all education savings accounts with respect to a beneficiary during any taxable year shall, in the aggregate, include not more than ten thousand dollars in qualified education expenses incurred during the taxable year.
(3) Nothing in this Chapter or in any education savings account owner’s agreement entered into pursuant to this Chapter shall be construed as a guarantee by the state, the authority, or any elementary or secondary school that a beneficiary of such an account will be admitted to such a school, or, upon admission to such a school, will be permitted to continue to attend or will receive a diploma or any other affirmation of program completion from the school. Nothing in this Chapter or in any education savings account owner’s agreement entered into pursuant to this Chapter shall be considered a guarantee that the beneficiary’s cost of tuition at an elementary or secondary school will be covered in full by the proceeds of the beneficiary’s education savings account.
(4) Subject to the limitation imposed by La. Rev. Stat. 17:3100.7(B), the authority shall guarantee payment of the redemption value of an education savings account in which the deposits and interest are invested in fixed earnings.
(5) Nothing in this Chapter or in any education savings account owner’s agreement entered into pursuant to this Chapter shall be construed as a guarantee of payment of the redemption value of an education savings account by the state, the authority, or any elementary or secondary school for deposits and interest invested in variable earnings.
B. The following information shall be disclosed in writing to each person completing an account owner’s agreement:
(1) The terms and conditions for opening, maintaining, terminating, or redeeming an education savings account.
(2) Any restrictions on the substitution of another individual for the original beneficiary.
(3) The person entitled to terminate the account owner’s agreement.
(4) The terms and conditions under which the agreement may be terminated and the amount of the refund, if any, to which the person terminating the agreement, or that person’s designee, is entitled upon termination.
(5) The obligation of the authority to make payments to a beneficiary, or an elementary or secondary school on behalf of a beneficiary pursuant to Subsection A of this Section, based upon the redemption value accrued on behalf of the beneficiary.
(6) The method by which withdrawals from the education savings account shall be applied toward payment of qualified education expenses.
(7) The period of time during which the beneficiary may receive benefits under the agreement.
(8) The terms and conditions under which money may be wholly or partially withdrawn from the program.
(9) A clear statement that the act of establishing an education savings account pursuant to this Chapter does not guarantee full payment of tuition on behalf of the beneficiary.
(10) A clear statement of fees that may be imposed and collected and an estimate of the amount of such fees for the two years following the establishment of an agreement.
(11) All other rights and obligations of the purchaser and the authority and any other terms, conditions, and provisions the authority considers necessary and appropriate.
C. An education savings account owner’s agreement may provide that the authority shall pay directly to the elementary or secondary school in which the beneficiary is enrolled the amount represented by the qualified education expenses incurred that term, subject to the limitations provided in Paragraph (A)(2) of this Section.
D. Prior to the close of the calendar year in which the program is implemented and each year thereafter on a date specified by the authority, the state treasurer shall determine and report to the authority the total earnings and the rate of return achieved on deposits in the Louisiana Education Tuition and Savings Fund. Based upon the fund’s reported earnings, the authority shall establish the rate of interest to be applied to the accumulated principal and interest in education savings accounts of record, subject to approval by the state treasurer. The authority shall calculate and credit the appropriate amount of interest earnings to each such account prior to the close of the calendar year.
E. If the redemption value of an education savings account is in excess of the maximum allowed to be saved pursuant to the provisions of 26 U.S.C. § 529 as amended, the excess value shall be treated in accordance with La. Rev. Stat. 17:3100.7.
F.(1) Checks and electronic funds transfers through the Automated Clearing House Network, or its successor, received for deposit in a variable earnings option shall be invested by the state treasurer in fixed earnings prior to the trade date. All earnings from such investments from the beginning of the program shall be the property of the state and shall be deposited in the Variable Earnings Transaction Fund.
(2) Any increase in the value of an account over the amount deposited shall be forfeited by the account owner and deposited in the Variable Earnings Transaction Fund if the deposit was used to purchase units in a variable earnings option and made by check or Automated Clearing House Network a transfer that, subsequent to the trade date, was not honored by the financial institution on which it was drawn.
(3) Any increase in the value of an account over the amount deposited shall be forfeited by the account owner and deposited in the Variable Earnings Transaction Fund if the account was invested in a variable earnings option and terminated within twelve months of the date the account was opened.
(4) The monies in the Variable Earnings Transaction Fund shall be used by the authority to pay a financial institution’s charges and any loss in value between the purchase and redemption of units in a variable earnings option resulting from a check deposit or Automated Clearing House Network transfer that, subsequent to the trade date, is not honored by the financial institution on which it was drawn.
Acts 2018, No. 687, §2, eff. May 30, 2018; Acts 2021, No. 52, §1, eff. Jan. 1, 2022.