§ 16-57-6.1. Tuition savings program. (a) The general treasurer, in conjunction with the division, the state investment commission, executive director of the Rhode Island student loan authority, and the commissioner of postsecondary education, shall establish, in any form as he or she deems appropriate, a tuition savings program to allow persons to save money for the sole purpose of meeting qualified higher education expenses.

(b) All money received in connection with the tuition savings program shall be segregated from all other funds into two (2) funds, a program fund and an administrative fund. No more than two percent (2%) of money in the program fund may be transferred annually to the administrative fund for the purpose of paying operating costs of administering the tuition savings program. Money accrued by participants in the program fund may be used for payments to an eligible institution. All proceeds from the tuition savings program shall be directed to the administrative fund, and to the extent they exceed the operating costs of administering the tuition savings program, said excess shall be used for financial aid-related activities in Rhode Island pursuant to § 16-56-6.

(c) The state investment commission shall invest money within the program fund in any investments that are authorized by the general laws, including equities and fixed-income securities. The composition of investments shall be determined by the state investment commission.

(d) A participant may at any time withdraw funds from the participant's account in the tuition savings program in an amount up to the value of the account at the time the withdrawal is implemented, less such administrative fee as may be levied by the treasurer in connection with the withdrawal.

(e) Notwithstanding any of the foregoing provisions, no administrative fee may be levied by the treasurer in the event that a participant requests withdrawal of funds from the participant's account in the tuition savings program on account of, and within the meanings of § 529 of the Internal Revenue Code [26 U.S.C. § 529]:

(1) The death of the beneficiary of the account;

(2) The disability of the beneficiary; or

(3) A scholarship, allowance, or payment received by the beneficiary to the extent that the amount of the refund does not exceed the amount of the scholarship, allowance, or payment.

(f) In the event that a participant requests a withdrawal from an account in the tuition savings program other than: (1) A withdrawal used for qualified higher education expenses of the beneficiary of the account or (2): For a reason referred to in subdivision (e)(1), (e)(2), or (e)(3) of this section, the treasurer shall impose a more than de minimis penalty on the earnings portion of the withdrawal in accordance with § 529 of the Internal Revenue Code [26 U.S.C. § 529]; provided that no penalty shall be imposed with respect to any such withdrawal, or any other withdrawal, from any account in the tuition savings plan to which the tax made applicable by § 529 of the Internal Revenue Code [26 U.S.C. § 529] is effective.

(g) [Deleted by P.L. 2015, ch. 141, art. 7, § 6].

History of Section. (P.L. 1997, ch. 81, § 2; P.L. 1997, ch. 91, § 2; P.L. 2001, ch. 364, § 2; P.L. 2015, ch. 141, art. 7, § 6.)