Amend the bill by inserting after the title and before the enacting clause the following:
‘Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, the Legislature established the Maine Education Savings Program, also known as NextGen 529, as Maine's Section 529 plan, so-called after Section 529 of the federal Internal Revenue Code of 1986, to be administered by the Finance Authority of Maine; and
Whereas, the Maine Education Savings Program provides account owners and beneficiaries the opportunity to realize potential tax advantages if assets are used for qualified higher education expenses; and
Whereas, the United States Congress has recently expanded the federal definition of qualified higher education expenses to include certain expenses related to registered and certified apprenticeship programs and limited repayments of qualified education loans; and
Whereas, under the Maine Revised Statutes, Title 20-A, section 11483, the authority is authorized to take necessary action to ensure that the Maine Education Savings Program complies with federal law, and the authority considers it prudent to make statutory changes to conform with the expanded federal definition and to make certain other amendments to the law; and
Whereas, in order to avoid confusion in the application and use of the program, it is necessary that these conforming changes take effect as soon as possible; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,’
Amend the bill by inserting after the enacting clause and before section 1 the following:
‘Sec. 1. 20-A MRSA §11471, as amended by PL 2017, c. 474, Pt. F, §§2, 3 and 9, is further amended to read:
As used in this chapter, unless the context otherwise indicates, the following terms have the following meanings.
Sec. 2. 20-A MRSA §11472, as amended by PL 2017, c. 474, Pt. F, §4, is further amended to read:
The Maine Education Savings Program, referred to in this chapter as the "program," is established to encourage the investment of funds to be used for higher education expenses at institutions of higher education and, beginning January 1, 2018, and as long as permitted by provisions of Section 529 of the federal Internal Revenue Code of 1986, expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school. The authority shall administer the program and act as administrator of the program fund.’
Amend the bill by inserting after section 1 the following:
‘Sec. 2. 20-A MRSA §11475, sub-§11, as enacted by PL 1997, c. 732, §4, is amended to read:
Sec. 3. 20-A MRSA §11476, as amended by PL 2011, c. 150, §4 and affected by §9, is further amended to read:
The authority, with the advice of the advisory committee, may provide investment options for a participant within the program fund to the extent permitted by Internal Revenue Code provisions addressing qualified state tuition programs. The authority, with the advice of the advisory committee, shall invest, or cause to be invested, the amounts on deposit in the program fund in a reasonable manner to achieve the objectives of each fund, exercising the discretion and care of a prudent person in similar circumstances with similar objectives. A participant or designated beneficiary may not direct the investment of any amounts on deposit in the program fund, except to the extent allowed pursuant to provisions of the Internal Revenue Code addressing qualified state tuition programs. The authority shall give due consideration to rate of return, term or maturity, diversification and liquidity of investments within the program fund or any account in the program fund pertaining to the projected disbursements and expenditures from the program fund and the expected payments, deposits, contributions and gifts to be received.
Sec. 4. 20-A MRSA §11478, sub-§1, as enacted by PL 1997, c. 732, §4, is amended to read:
Sec. 5. 20-A MRSA §11479, as amended by PL 2017, c. 474, Pt. F, §6, is further amended to read:
The assets of the program fund, all program earnings and any income from operations are exempt from all taxation by the State or any of its political subdivisions. A deposit to any account, transfer of that account to a successor participant, designation of a successor beneficiary of that account, credit of program earnings to that account or qualified distribution from that account used for the purpose of paying higher education expenses of the designated beneficiary of that account pursuant to this chapter, as long as that distribution does not exceed the limits established in Section 529 of the federal Internal Revenue Code of 1986 , as amended, or rollover distributions permitted under Section 529 of the federal Internal Revenue Code of 1986 , as amended, does not subject that participant, the estate of that participant or any beneficiary to any state income or estate tax liability. In the event of cancellation or termination of a participation agreement and distribution of funds to a participant, the increase in value over the amount deposited in the program fund by that participant may be taxable to that participant in the year distributed.
Sec. 6. 20-A MRSA §11483, as enacted by PL 1997, c. 732, §4, is amended to read:
The authority may take any action necessary to ensure that the program complies with the federal Internal Revenue Code of 1986, Section 529, as amended, and any successor provisions and other applicable laws, rules and regulations adopted pursuant to that provision to the extent necessary for the program fund to constitute a qualified state tuition program with the benefits of eligibility under provisions of the federal Internal Revenue Code addressing qualified state tuition programs.
Sec. 7. 20-A MRSA §11485, as enacted by PL 1997, c. 732, §4, is amended to read:
The authority must shall establish rules for the implementation of the program established by this chapter, including rules establishing fees and penalties and rules necessary to ensure treatment as a qualified state tuition program for federal tax purposes. Rules adopted pursuant to this section, including those setting fees and penalties, are routine technical rules as defined by Title 5, chapter 375, subchapter II-A 2-A. The authority shall submit a report to the joint standing committee of the Legislature having jurisdiction over education and cultural affairs by January 30, 1999 on the rules and rule-making process to implement a program providing limits on future increases in the costs of education of participating institutions of higher education pursuant to section 11474, subsection 8.
Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.’
Amend the bill by relettering or renumbering any nonconsecutive Part letter or section number to read consecutively.
This amendment, which is the majority report of the committee, retains the change from mandatory to permissive the investment of fund dollars by the Finance Authority of Maine in state-based financial institutions. This amendment also amends certain provisions of the law in order to conform elements of the Maine Education Savings Program to recent changes to federal law affecting so-called Section 529 programs. This amendment also adds an emergency preamble and emergency clause to the bill.
FISCAL NOTE REQUIRED