34 Tex. Admin. Code § 7.138 - Recordkeeping for Certain Rollover Contributions

(a) In the case of a rollover contribution from another qualified tuition plan, a Coverdell education savings account, or a qualified U.S. Savings Bond, the purchaser shall provide appropriate documentation and certifications to the plan manager to identify the source of the contribution, confirm that the contribution is a qualified rollover under Internal Revenue Code, §529, and to specify that portion of the contribution that is attributable to the purchaser's contributions or investment in the previous account and that portion of the rollover contribution that is attributable to earnings that were accumulated in the previous account. Rollovers must be completed within 60 days to avoid potential tax consequences.

(b) For a purchase of tuition units using a contribution from a direct transfer between 529 programs, such as a trustee-to-trustee rollover, the purchaser must arrange for the distributing program to provide to the plan manager a statement setting forth the earnings portion of the rollover distribution within 30 days after the distribution or by January 10th of the year following the calendar year in which the rollover occurred, whichever is earlier.

(c) Upon receipt of the rollover contribution, the plan manager will add the earnings portion of the rollover contribution to the earnings recorded under the prepaid tuition contract to which the rollover contribution is made.

(d) Until the plan manager receives appropriate documentation showing the earnings portion of the rollover contribution, the board will treat the entire amount of the contribution as earnings in the prepaid tuition contract receiving the distribution.

(e) For the purpose of this section, "appropriate documentation" means:

(1) in the case of a rollover contribution from a Coverdell education savings account, an account statement issued by the financial institution that acted as trustee or custodian of the education savings account that shows basis and earnings in the account;

(2) in the case of a rollover contribution from the redemption of qualified U.S. Savings Bonds, an account statement or Form 1099-INT issued by the financial institution that redeemed the bonds showing interest from the redemption of the bonds;

(3) in the case of a rollover contribution from another 529 program, a statement issued by the distributing 529 program that shows the earnings portion of the distribution; or

(4) other documentation acceptable to the board supported by the purchaser's certification.

Notes

34 Tex. Admin. Code § 7.138

The provisions of this §7.138 adopted to be effective August 27, 2008, 33 TexReg 6957