Michigan Laws 565.1013 – Improper use of funds; penalties; exceptions; definitions
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Terms Used In Michigan Laws 565.1013
- account: means an account with a financial institution that an account holder designates as a first-time home buyer savings account on his or her income tax return pursuant to this act for the purpose of paying or reimbursing eligible costs for the purchase of a single-family residence in this state by a qualified beneficiary. See Michigan Laws 565.1003
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
- 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
- Department: means the department of treasury. See Michigan Laws 565.1003
- Eligible costs: means the down payment and allowable closing costs for the purchase of a single-family residence in this state by a qualified beneficiary. See Michigan Laws 565.1003
- Qualified beneficiary: means a first-time home buyer who is designated as the beneficiary of an account designated by the account holder as a first-time home buyer savings account. See Michigan Laws 565.1003
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
- United States: shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) If funds are withdrawn from an account for any purpose other than the payment of eligible costs by or on behalf of a qualified beneficiary, there is a penalty equal to 10% of the amount withdrawn. The penalty shall be paid to the department.
(2) The penalty does not apply if the funds withdrawn satisfy any of the following:
(a) Withdrawn by reason of the qualified beneficiary‘s death or disability.
(b) A disbursement of assets of the account pursuant to a filing for protection under the United States bankruptcy code, 11 USC 101 to 1330.
(c) Transferred from an account established pursuant to this act into another account established pursuant to this act for the benefit of another qualified beneficiary as provided in section 7.
(d) Withdrawn by reason of a hardship withdrawal as provided in section 7.
(e) Withdrawn by reason of qualified beneficiary who is a service member who is transferred or deployed out of this state on active duty pursuant to a permanent change of station order and provides proof acceptable to the department that the qualified beneficiary or his or her spouse is assigned to a duty station outside this state under a permanent change of station order.
(3) As used in this section:
(a) “Active duty” means active duty pursuant to an executive order of the President of the United States, an act of Congress, or an order of the governor.
(b) “Armed forces” means that term as defined in section 2 of the veteran right to employment services act, 1994 PA 39, MCL 35.1092.
(c) “Michigan National Guard” means that term as defined in section 105 of the Michigan military act, 1967 PA 150, MCL 32.505.
(d) “Service member” means a member of the armed forces, a reserve branch of the armed forces, or the Michigan National Guard.