(a)
(1) "Excess contributions" means
contributions on behalf of a designated beneficiary in excess of the maximum
account balance.
(2) "Maximum
account balance" means an amount equal to the average amount of the qualified
higher education expenses that would be incurred by a designated beneficiary
for five years of study at institutions of postsecondary education located in
the midwest states, as determined annually by the state treasurer.
(b) The program manager shall
establish adequate safeguards to prevent excess contributions. At a minimum,
those safeguards shall include all of the following:
(1) The program manager shall identify all
accounts with the same designated beneficiary.
(2) When a contribution is forwarded to the
program manager, the program manager shall use the following calculation to
determine whether that contribution would exceed the maximum account balance:
(A) Add the following amounts:
(i) The new contribution;
(ii) the aggregate balance of all accounts
for that designated beneficiary at the end of the prior quarter; and
(iii) the sum of all other contributions made
during the current quarter to any account for that designated beneficiary; and
(B) subtract the sum of
all withdrawals made during the current quarter from any account for that
designated beneficiary.
Any portion of the contribution that is determined in this
manner to exceed the maximum account balance shall be an excess contribution.
(3) If the
program manager determines that a contribution will result in excess
contributions for that designated beneficiary, the program manager shall
deposit only that portion of the contribution, if any, that will not result in
an excess contribution. The program manager shall return the balance of the
contribution to the contributor.
(c) The program manager shall continually
monitor the contributions to and aggregate balance of all the accounts for each
designated beneficiary, using the following calculation:
(A) Add the following amounts:
(i) The aggregate balance of all accounts for
that designated beneficiary at the end of the prior quarter; and
(ii) the sum of all contributions made during
the current quarter to any account for that designated beneficiary; and
Linked Deposit Loan Programs
(B) subtract the sum of all withdrawals made
during the current quarter from any account for that designated beneficiary.
If at any time the result of this calculation exceeds the
maximum account balance, the program manager shall determine whether any
portion of the amount in excess of the maximum account balance is attributable
to contributions made during the current quarter. The program manager shall not
be required to take any further action if the amount that created the excess is
not attributable to current-quarter contributions. If any portion of the excess
is attributable to current-quarter contributions, the program manager shall
notify the account owner of each account creating the excess that excess
contributions have been made on behalf of the designated beneficiary and that
the excess contributions attributable to that account must be eliminated
through a withdrawal or a rollover distribution.
(d) If, within 30 days of the date the notice
is mailed to the account owner, the account owner does not submit a request for
a withdrawal or rollover distribution in an amount sufficient to eliminate the
excess contributions for that designated beneficiary, the program manager shall
process withdrawal of the excess contributions from the affected account and
shall forward the proceeds to the account owner.
