34 Tex. Admin. Code § 7.135 - Refunds
(a) Refunds shall be made in accordance with
provisions of this subchapter and the prepaid tuition contract, in a manner
that will not adversely affect the tax status of the program under applicable
provisions of Internal Revenue Code, §529. Refunds shall be governed by
this subchapter as amended and Internal Revenue Code, §529, as in effect
on the date the request for refund is submitted to the plan manager.
(b) Earnings may be paid with a refund only
if the board determines that such payment will not adversely affect the
actuarial soundness of the fund to pay the costs of program administration and
operations and to meet the obligations of the program, as provided by Education
Code, §
54.770. It is the
board's intent that refund amounts will be based on the definitions of "Refund
Value," "Reduced Refund Value," or "Transfer Value," in §
7.122 of this title (relating to
Definitions), as applicable.
(c)
The purchaser is entitled to a refund following cancellation or termination of
a prepaid tuition contract, subject to any limitations imposed by Internal
Revenue Code, §529, this subchapter, and the provisions of the prepaid
tuition contract.
(d) Refunds shall
be made to the purchaser of the prepaid tuition contract or, in the event of
the purchaser's death, the person designated in the enrollment contract or
other legal document to have the right of survivorship.
(e) Should a beneficiary terminate his/her
student status on or after the date on which the institution denies refunds to
students withdrawing for a particular semester, no refund shall be paid under
the prepaid tuition contract for amounts relating to such semester.
(f) If the prepaid tuition contract is
cancelled due to the death or disability of the beneficiary, or due to the
receipt of a scholarship by the beneficiary, the purchaser may elect to change
the beneficiary or apply for a refund of the Refund Value of the account, less
any fees due and payable to the program under the board's fee schedule. The
administrative fee will be retained by the program.
(g) If the beneficiary redeems fewer tuition
units to pay the cost of tuition and required fees than the number of units
purchased on behalf of the beneficiary under a prepaid tuition contract, other
than to defer redemption as permitted in accordance with Education Code, §
54.758, the purchaser
may request a refund of the Refund Value of the account, less any fees due and
payable under the contract, or transfer the remaining units to another
beneficiary in accordance with this subchapter. The administrative fee will be
retained by the board.
(h) If the
beneficiary decides not to attend an institution of higher education within a
reasonable amount of time after graduating from high school, the purchaser may
elect to:
(1) change the beneficiary to
another eligible beneficiary;
(2)
hold the tuition units in the account until the 10th anniversary of the date
the beneficiary was projected to graduate from high school, not counting time
spent by the beneficiary as an active duty member of the United States armed
services; or
(3) cancel the
contract and request a refund of the Refund Value of the account, less any fees
due and payable to the program. The administrative fee will be retained by the
board.
(i) If the
prepaid tuition contract is terminated due to misrepresentation, failure to
provide required information or default, the purchaser may apply for a refund
of the Reduced Refund Value of the account, less any fees due and payable to
the program under the board's fee schedule. The administrative fee will be
retained by the program.
(j) If the
prepaid tuition contract is terminated automatically due to expiration of the
10 year anniversary period specified in §
7.133(c) of this
title (related to Contract Termination), the purchaser may apply for a refund
of the Refund Value of the account, less any fees due and payable to the
program under the board's fee schedule. However, the Refund Value will be
limited to include only net earnings that have accrued under the contract up
until the date the contract has been terminated automatically.
(k) In the event of any other cancellation
request not addressed separately in this subchapter:
(1) if the cancellation request is received
prior to the third anniversary of the first payment due date, the purchaser may
apply for a refund of the Reduced Refund Value of the account. The
administrative fee will be retained by the board; or
(2) if the cancellation request is received
on or following the third anniversary of the first payment due date, the
purchaser may apply for a refund of the Refund Value of the account (for those
tuition units held for three or more years) or the Reduced Refund Value (for
tuition units held less than three years). The administrative fee will be
retained by the board.
(l) A lump sum refund may be made within 60
days of receiving a properly completed signed request for refund from the
purchaser on a form promulgated by the plan manager, along with any required
supporting documentation. Proof of death, disability or scholarship shall be in
a form acceptable to the board.
(m)
Notwithstanding any other provision of this section, the purchaser may
designate in the prepaid tuition contract a person who shall have a right of
survivorship with respect to purchaser's rights under a prepaid tuition
contract; provided that such designation shall in no way affect the purchaser's
ability to modify or terminate the contract and receive a refund without the
consent or authorization of the designee. The purchaser may change the
designation at any time by properly completing and submitting to the plan
manager a right of survivorship form. The purchaser shall provide any other
information requested by the board in support of the designation. It is the
purchaser's responsibility to provide the plan manager with current information
for survivorship rights.
(n)
Distributions or transfers to another qualified tuition plan are governed by
§
7.137 of this title (relating to
Transfers Among 529 Plans) and Education Code, §
54.7671.
(o) Refunds or distributions that exceed the
qualified higher education expenses incurred by the beneficiary during the year
of the distribution, or other nonqualified withdrawals, may subject the
distributee to income tax liability on any earnings and a tax penalty, as
provided by Internal Revenue Code, §529.
(p) The number of refunds per year for a
single purchaser shall be limited to twice in a 12 month period and shall be
for a minimum of 100% of the purchaser's tuition units or in increments of 25
units, whichever is less.
Notes
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