|SB 0933||Creates "Missouri Higher Education Deposit Program"|
|LR Number:||3261S.02I||Fiscal Note:||3261-02|
|Committee:||Financial and Governmental Organization, Veterans' Affairs & Elections|
|Last Action:||05/14/04 - S Inf Calendar S Bills for Perfection||Journal page:|
|Effective Date:||August 28, 2004|
SB 933 - This act allows an income tax deduction of up to $8,000 per taxpayer for annual contributions made to qualified savings programs and any similar I.R.C. Section 529 plan authorized by this state or any other state or political subdivision. Currently, the income tax deduction is only available for contributions made to the Missouri Higher Education Savings Program.
This act creates the "Missouri Higher Education Deposit Program". This program is a nonexclusive alternative to the Missouri Higher Education Savings Program and participants may elect to participate in both programs subject to aggregate program limitations. The program is administered by the Missouri Higher Education Deposit Program Board which shall consist of the Director of the Division of Finance, who shall serve as chair, the Commissioner of the Department of Higher Education, the Commissioner of the Office of Administration and private citizen representatives with experience in the areas of deposit rate determination and placement of certificates of deposit. Private citizen members shall serve four year terms. Members of the Board shall be subject to conflict of interest provisions for public employees. The Board is required to meet at least quarterly.
The Board is granted certain powers to develop and implement the program, including the power to enter into agreements with financial entities for the operation of the deposit program, provided that such entity is a private for-profit or not-for- profit entity, and the power to enter into participation agreements with participants in the program. The Board may invest the funds received from participants in appropriate investment instruments held by depository institutions or directly deposit the funds in such institutions. The investment of funds may be delegated by the Board to representatives of financial entities, but the investment must be in certificates of deposit and other deposits in federally insured depository institutions. Such representatives must pass a board-approved qualification test and be certified by the Board.
The Board is responsible for establishing various deposit opportunities based on amounts deposited and time held that are uniformly available to all depository institutions that participate in the program. The various categories of fixed or variable rates shall be the only interest rates available under this program.
The Board is authorized to enter into agreements with participants on behalf of beneficiaries. The agreement must include certain terms and conditions, including the method for calculating the return on the contribution, the risks associated with the investment, the maximum amount that may be contributed annually, and an understanding that the agreement does not guarantee admittance to any eligible educational institution. The Board shall establish the maximum annual amount that may be contributed by a participant and the minimum length of time that contributions and earnings must be held by the program. Early withdrawals shall be subject to a penalty.
Contributions and earnings in the program may be used for qualified educational expenses. Participants may cancel a participation agreement at will. The Board shall impose a maximum 10% penalty of the earnings of the account for any distribution not used for certain purposes. The State Auditor shall, semi-annually, review the financial status and investment policy of the program as well as the participation rate and continued viability of the program. Money accruing to and deposited in individual deposit accounts shall not be part of "total state revenues" as defined by the Missouri Constitution. Personally identifiable information regarding participants and beneficiaries shall be confidential.
This act is similar to SCS/SB 18 (2003) and HCS/HB 73