Iowa Code 12D.3 – Participation agreements for trust
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The trust may enter into participation agreements with participants on behalf of beneficiaries pursuant to the following terms and agreements:
1. Each participation agreement may require a participant to agree to invest a specific amount of money in the trust for a specific period of time for the benefit of a specific beneficiary. A participant shall not be required to make an annual contribution on behalf of a beneficiary. The maximum contribution that may be deducted for Iowa income tax purposes shall not exceed two thousand dollars per beneficiary per year adjusted annually to reflect increases in the consumer price index. The treasurer of state shall set an account balance limit to maintain compliance with section 529 of the Internal Revenue Code. A contribution shall not be permitted to the extent it causes the aggregate balance of all accounts established for the same beneficiary under the trust to exceed the applicable account balance limit.
Terms Used In Iowa Code 12D.3
- Account balance limit: means the maximum allowable aggregate balance of accounts established for the same beneficiary. See Iowa Code 12D.1
- 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 the individual designated by a participation agreement to benefit from advance payments of qualified education expenses on behalf of the beneficiary. See Iowa Code 12D.1
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Participant: means an individual, individual's legal representative, trust, estate, or an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from taxation under section 501(a) of the Internal Revenue Code, that has entered into a participation agreement under this chapter for the advance payment of qualified education expenses on behalf of a beneficiary. See Iowa Code 12D.1
- Participation agreement: means an agreement between a participant and the trust entered into under this chapter. See Iowa Code 12D.1
- Qualified education expenses: includes expenses for the participation in an apprenticeship program registered and certified with the United States secretary of labor under section 1 of the National Apprenticeship Act, 29 U. See Iowa Code 12D.1
- Qualified educational institution: means an institution of higher education, or any elementary or secondary public, private, or religious school described in section 529(c)(7) of the Internal Revenue Code. See Iowa Code 12D.1
- Rule: includes "regulation". See Iowa Code 4.1
- state: when applied to the different parts of the United States, includes the District of Columbia and the territories, and the words "United States" may include the said district and territories. See Iowa Code 4.1
- trust: means the trust created under section 12D. See Iowa Code 12D.1
- Tuition: means the quarter, semester, or annual charges imposed to attend a qualified educational institution and required as a condition of enrollment or attendance. See Iowa Code 12D.1
- year: means twelve consecutive months. See Iowa Code 4.1
2. The execution of a participation agreement by the trust shall not guarantee in any way that qualified education expenses will be equal to projections and estimates provided by the trust or that the beneficiary named in any participation agreement will attain any of the following:
a. Be admitted to a qualified educational institution.
b. If admitted, be determined a resident for tuition purposes by the qualified educational institution.
c. Be allowed to continue attendance at the qualified educational institution following admission.
d. Graduate from the qualified educational institution.
3. a. A beneficiary under a participation agreement may be changed as permitted under rules adopted by the treasurer of state upon written request of the participant as long as the substitute beneficiary is eligible for participation.
b. Participation agreements may otherwise be freely amended throughout their terms in order to enable participants to increase or decrease the level of participation, change the designation of beneficiaries, and carry out similar matters as authorized by rule.
4. Each participation agreement shall provide that the participation agreement may be canceled upon the terms and conditions, and upon payment of applicable fees and costs set forth and contained in the rules adopted by the treasurer of state.
5. A participant may designate a successor in accordance with rules adopted by the treasurer of state. The designated successor shall succeed to the ownership of the account in the event of the death of the participant. In the event a participant dies and has not designated a successor to the account, the following criteria shall apply:
a. The beneficiary of the account, if eighteen years of age or older, shall become the owner of the account as well as remain the beneficiary upon filing the appropriate forms in accordance with rules adopted by the treasurer of state.
b. If the beneficiary of the account is under the age of eighteen, account ownership shall be transferred to the first surviving parent or other legal guardian of the beneficiary to file the appropriate forms in accordance with rules adopted by the treasurer of state.