April 25, 2019, Introduced by Senator LUCIDO and referred to the Committee on Finance.
A bill to amend 2000 PA 161, entitled
"Michigan education savings program act,"
by amending sections 2 and 16 (MCL 390.1472 and 390.1486), section
2 as amended by 2010 PA 6.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Account" or "education savings account" means an account
established under this act.
(b) "Account owner" means any of the following:
(i) The individual who enters into a Michigan education
savings program agreement and establishes an education savings
account. The account owner may also be the designated beneficiary
of the account.
(ii) A state or local government agency or instrumentality, an
entity exempt from taxation under section 501(c)(3) of the internal
revenue code, an estate or trust, or a corporation that enters into
a Michigan education savings program agreement and establishes an
education savings account.
(c) "Board" means the board of directors of the Michigan
education trust described in section 10 of the Michigan education
trust act, 1986 PA 316, MCL 390.1430.
(d) "Department" means the department of treasury.
(e) "Designated beneficiary" means the individual designated
as the individual whose higher education expenses are expected to
be paid from the account.
(f) "Eligible educational institution" means that term as
defined in section 529 of the internal revenue code or a college,
university, community college, or junior college described in
section 4, 5, or 6 of article VIII of the state constitution of
1963 or established under section 7 of article VIII of the state
constitution of 1963.
(g) "Internal revenue code" means the United States internal
code of 1986 in effect on January 1,
2002 2018 or at the
option of the taxpayer, in effect for the current year.
(h) "Management contract" means the contract executed between
the treasurer and a program manager.
(i) "Member of the family" means a family member as defined in
section 529 of the internal revenue code.
(j) "Michigan education savings program agreement" means the
agreement between the program and an account owner that establishes
an education savings account.
(k) "Program" means the Michigan education savings program
established pursuant to this act.
(l) "Program manager" means an entity selected by the
treasurer to act as a manager of 1 or more of the savings plans
offered under the program.
(m) "Qualified higher education expenses" means qualified
higher education expenses as defined in section 529 of the internal
(n) "Qualified withdrawal" means a distribution that is not
subject to a penalty or an excise tax under section 529 of the
internal revenue code, a penalty under this act, or taxation under
income tax act of 1967, 1967 PA 281, MCL 206.1 to
206.713, and that meets any of the following:
(i) A withdrawal from an account to pay the qualified higher
education expenses of the designated beneficiary incurred after the
account is established.
(ii) A withdrawal made as the result of the death or
disability of the designated beneficiary of an account.
(iii) A withdrawal made because a beneficiary received a
scholarship that paid for all or part of the qualified higher
education expenses of the beneficiary to the extent the amount of
the withdrawal does not exceed the amount of the scholarship.
(iv) A withdrawal made because a beneficiary attended a
service academy to the extent that the amount of the withdrawal
does not exceed the costs of the advanced education attributable to
the beneficiary's attendance in the service academy.
(v) A transfer of funds due to the termination of the
management contract as provided in section 5.
(vi) A transfer of funds as provided in section 8.
(o) "Savings plan" or "plans" means a plan that provides
different investment strategies and allows account distributions
for qualified higher education expenses.
"Service academy" means the United States
Military Academy, United States naval academy, Naval
air force academy, Air Force Academy, United
coast guard academy, Coast
Guard Academy, or United States
(q) "Treasurer" means the state treasurer.
Sec. 16. (1) Contributions to and interest earned on an
education savings account are exempt from taxation as provided in
30 and 30f section 30 of the income tax act of 1967, 1967
281, MCL 206.30.
(2) Withdrawals made from education savings accounts are
taxable as provided in section 30 of the income tax act of 1967,
1967 PA 281, MCL 206.30.
Enacting section 1. This amendatory act does not take effect
unless Senate Joint Resolution F
of the 100th Legislature becomes a part of
the state constitution of 1963 as provided in section 1 of article
XII of the state constitution of 1963.