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Learning Quest Education Savings Program Laws & Regulations

Following are links to laws pertaining to our Kansas Learning Quest division. These laws are provided as a service of the Information Network of Kansas.

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Kansas Learning Quest Laws

  • K.S.A. 75-640 - Postsecondary education savings program; legislative declaration and intent.
  • K.S.A. 75-641 - Same; citation of act.
  • K.S.A. 75-642 - Same; purpose.
  • K.S.A. 75-643 - Same; definitions.
  • K.S.A. 75-644 - Same; administration by state treasurer; authorities and responsibilities.
  • K.S.A. 75-645 - Same; implementation by state treasurer; selection of depositories of accounts, procedure; management contracts, contents; audits a.
  • K.S.A. 75-646 - Same; establishment of accounts, procedures; qualified contributions; penalties; distributions.
  • K.S.A. 75-647 - Same; rights and obligations construed.
  • K.S.A. 75-648 - Same; trust fund established; expense fund established; disposition of moneys and interest; payment of expenses of administration.
  • K.S.A. 75-649 - Payroll deductions for postsecondary education savings accounts.
  • K.S.A. 75-650 - Low-income family postsecondary savings accounts incentive program; definitions; administration by state treasurer; applications; limitations.
  • K.S.A. 79-32,117(c)(xv) - Kansas income tax deduction.
  • K.S.A. 60-2308(f) - Pension and retirement money exempt, exception

Kansas Learning Quest Administrative Regulations

As printed in Vol. 19, No. 24, June 15, 2000 Kansas Register
Doc. No. 025346

State of Kansas
Kansas State Treasurer
Permanent Administrative Regulations

Article 2.--KANSAS POSTSECONDARY EDUCATION SAVINGS PROGRAM

3-2-1. No guarantee of principal or earnings; re-quired statement.
Each account contract, account appli- cation, and account deposit slip, and all promotional ma- terials for the Kansas postsecondary education savings program shall contain the following statement or an equivalent statement approved by the treasurer, in a typeface and a location that are readily visible: ``NOTICE: Accounts established under the Kansas Postsecondary Education Savings Program and their earnings are nei- ther insured nor guaranteed by the State of Kansas.'' (Au- thorized by K.S.A. 1999 Supp. 75-644 and 75-647; imple- menting K.S.A. 1999 Supp. 75-647; effective June 30, 2000.)

3-2-2. Excess contributions.
(a)(1) "Excess contributions'' means contributions on behalf of a designated beneficiary in excess of the maximum contribution amount.

(2) "Maximum contribution amount'' means an amount equal to the average amount of the qualified higher education expenses that would be incurred by des- ignated beneficiaries with the same projected year of en- rollment for five years of study at institutions of post- secondary education located in the midwest states, as determined annually by the state treasurer.

(b) In accordance with the management agreement, the program manager shall establish adequate safeguards to prevent excess contributions. At a minimum, those safe- guards shall include all of the following:

(1) The program manager shall identify all accounts with the same designated beneficiary.

(2) The program manager shall calculate the current, cumulative contributions for all of the accounts for a des- ignated beneficiary.

(3) When a contribution is forwarded to the program manager, the program manager shall determine whether that contribution, when added to current, cumulative contributions for that designated beneficiary, would ex- ceed the maximum contribution amount.

(4) If the program manager determines that a contri- bution will result in excess contributions for that desig- nated beneficiary, the program manager shall deposit only that portion of the contribution, if any, that will not result in excess contributions. The program manager shall return the balance of the contribution to the account owner.

(c) The program manager shall continuously monitor the current, cumulative contributions in all of the ac- counts for each designated beneficiary. If at any time the cumulative contributions in all of the accounts for a given designated beneficiary exceed the maximum contribution amount, the program manager shall notify the account owner of each account creating the excess contributions that excess contributions have been made on behalf of the designated beneficiary and that the cumulative contri- butions for that designated beneficiary must be reduced below the maximum contribution amount through a non- qualified withdrawal or a rollover distribution from one or more of the accounts.

(d) If, within 30 days of the date the notice is mailed to the owner of each account creating the excess contri- butions, one or more account owners do not submit a request for a nonqualified withdrawal or rollover distri- bution in an amount sufficient to eliminate the excess con- tributions for that designated beneficiary, the program manager shall process one or more nonqualified with- drawals in the following manner.

The program manager shall process a nonqualified withdrawal from each account creating the excess contri- butions for that designated beneficiary in an amount equal to the total excess contributions, adjusted for gain or loss. The program manager shall return the nonquali- fied withdrawal to each account owner, minus the pen- alty provided in K.S.A. 75-646(g), and amendments thereto. (Authorized by K.S.A. 1999 Supp. 75-644 and 75- 646; implementing K.S.A. 1999 Supp. 75-646; effective June 30, 2000.)

3-2-3. Withdrawals.
(a)(1) Subject to the limitations in K.S.A. 75-646(q), and amendments thereto, any account owner may withdraw part or all of the balance from the owner's account at any time.

(2) Any account owner may submit a written request for a waiver of the limitations established in K.S.A. 75- 646(q), and amendments thereto, in a form prescribed by the treasurer. The limitations in K.S.A. 75-646(q), and amendments thereto, may be waived by the treasurer upon a finding that failure to grant the requested waiver would create a manifest injustice or undue hardship for the account owner, designated beneficiary, or both and that the waiver would not violate any of the provisions of section 529 of the federal internal revenue code of 1986, as amended.

(3) The decision to grant a requested waiver may be delegated to the program manager, subject to all of the following conditions:

(A) The circumstances in which the decision to grant a waiver is delegated to the program manager may be lim- ited by the treasurer.

(B) The program manager shall base the decision to approve a waiver on the findings required in paragraph (2) of this subsection.

(C) The decision of the program manager may be re- versed by the treasurer upon a request for review by the account owner or on the initiative of the treasurer. Each decision of the treasurer shall be final.

(b) Each request for a withdrawal shall be made in the form prescribed by the treasurer. The request shall in- clude an identification of the account from which the withdrawal is to be made, the amount of the request, and an indication of which of the following types of with- drawals the account owner intends to make:

(1) A qualified withdrawal for qualified higher edu- cation expenses;

(2) a withdrawal made as the result of the death or disability of the designated beneficiary of the account;

(3) a withdrawal made because of a scholarship, or other allowance or payment recognized under section 529 of the federal internal revenue code of 1986, as amended, that is received by the designated beneficiary. However, this withdrawal shall not exceed the amount of the schol- arship or other allowance or payment;

(4) a nonqualified withdrawal subject to the penalty provided in K.S.A. 75-646(g), and amendments thereto; or

(5) a rollover distribution.

If the request for a withdrawal does not contain appro- priate documentation regarding the basis for the with- drawal, as required by the postsecondary education sav- ings agreement, the withdrawal shall be treated as a nonqualified withdrawal.

(c) Except as otherwise provided by the postsecondary education savings agreement, the program manager shall process each withdrawal upon receipt of a completed withdrawal request and any required documentation. (Authorized by K.S.A. 1999 Supp. 75-644 and 75-646; im- plementing K.S.A. 1999 Supp. 75-646; effective June 30, 2000.)

Article 4. Low-Income Family Postsecondary Savings Accounts Incentive Program

K.A.R. 3-4-1. Definitions.
In addition to the terms and definitions in K.S.A. 75-643 and K.S.A. 75-650 and amendments thereto, the following terms shall have the meanings specified in this regulation:

(a) ''Account owner'' means the account owner or joint account owners of a participant account.

(b) ''Contribution'' means any deposit made by an account owner to that account owner's participant account during a calendar year, except any deposit that is one of the following:

1) A rollover from another account in the Kansas postsecondary education savings program;

(2) a rollover from another state’s qualified tuition program as defined in internal revenue code section 529;

(3) a transfer from a Coverdell education savings account as defined in internal revenue code section 530; or

(4) a transfer of proceeds from a qualified U.S. savings bond as described in internal revenue code section
135(c)(2)(C).

(c) ‘‘Household’’ means a group of individuals who are related by birth, marriage, or adoption and who share a residence.

(d) ‘‘Participant’’ has the meaning specified in K.S.A. 75-650, and amendments thereto. Each participant shall be a beneficiary of a Kansas postsecondary education savings program account, as defined in K.S.A. 75-643 and amendments thereto.

(e) ‘‘Participant account’’ means the Kansas postsecondary education savings program account established by an account owner for the benefit of a participant who is enrolled in the matching grant program.

This regulation shall be effective on and after January1, 2010. (Authorized by and implementing K.S.A. 2008
Supp. 75-650, as amended by L. 2009, ch. 113, sec. 1; effective,T-3-6-29-06, June 29, 2006; effective Oct. 27, 2006;
amended July 6, 2007; amended Jan. 1, 2010.)

K.A.R. 3-4-2. Eligibility requirements.
Each account owner shall meet the following requirements:

(a) Be a resident of the state of Kansas;

(b) reside in a household with a combined federal adjusted gross income for all individuals residing in the household that is not more than 200 percent of the current federal poverty level; and

(c) not be claimed as a dependent on someone else’s income tax return.

This regulation shall be effective on and after January1, 2010. (Authorized by and implementing K.S.A. 2008 Supp. 75-650, as amended by 2009 SB 225, sec. 1; effective, T-3-6 29-06, June 29, 2006; effective Oct. 27, 2006; amended July 6, 2007; amended Jan. 1, 2010.)

K.A.R. 3-4-3. Applications.
Each application shall be processed in the order received for awarding the number of matching grants authorized by L. 2006, ch. 189, sec. 3, and amendments thereto.  Each application shall be accompanied by a copy of the federal income tax return for the previous tax year for each individual residing in the household who is required to file an income tax return.  (Authorized by and implementing L. 2006, ch.189, sec. 3; effective, T-3-6-29-06, June 29, 2006; effective Oct. 27, 2006.)

K.A.R. 3-4-4. Eligibility period.
Each participant shall be entitled to a matching grant equal to the amount of the account owner’s contributions to the participant account for the program year in which the account owner’s application is approved. The program year shall coincide with the period designated for contributions that are eligible for the deduction pursuant to K.S.A. 79-32,117(c)(xv) and amendments thereto. Each account owner shall reapply each program year to remain eligible for the program. A participant shall not be eligible during a program year in which a qualified or nonqualified withdrawal is taken from the participant account.

This regulation shall be effective on and after January1, 2010. (Authorized by and implementing K.S.A. 2008 Supp. 75-650, as amended by L. 2009, ch. 113, sec. 1; effective,T-3-6-29-06, June 29, 2006; effective Oct. 27, 2006;
amended July 6, 2007; amended Jan. 1, 2010.)

K.A.R. 3-4-5. Matching grant accounts.
The matching grant funds for each participant shall be deposited in a separate account in the account owner’s name for the benefit of the participant, with the following restrictions:

(a) No change in ownership of the participant account or the corresponding matching grant account shall be allowed, except upon approval by the treasurer. A change in account ownership to another account owner who meets the eligibility requirements in K.A.R. 3-4-2 may be approved by the treasurer. A change in account ownership to any individual may be approved by the treasurer upon the account owner’s death, divorce, or incapacity.

(b) For participant accounts that are not used to participate in the matching grant program after January 1, 2010, any change in the designated beneficiary for a participant account by the account owner shall cause the beneficiary for the corresponding matching grant account to be changed to the same new beneficiary.

(c) The investment portfolio for the corresponding matching grant account shall always be the same as the investment portfolio selected for each participant account.

(d) Each request for a withdrawal from the matching grant account shall be submitted to the treasurer’s office for approval. If the treasurer determines that the request is for qualified higher education expenses, then the request shall be approved. Each approved withdrawal from the matching grant account shall be paid either directly to the educational institution or to the account owner or the designated beneficiary, upon presentation of documentation acceptable to the treasurer that the account owner or designated beneficiary has paid qualified higher education expenses at least equal to the amount of the requested withdrawal. Each approved withdrawal shall be equally funded from the participant account and the corresponding matching grant account.

This regulation shall be effective on and after January1, 2010. (Authorized by and implementing K.S.A. 2008 Supp. 75-650, as amended by 2009 SB 225, sec. 1; effective,T-3-6-29-06, June 29, 2006; effective Oct. 27, 2006; amended July 6, 2007; amended Jan. 1, 2010.)

K.A.R. 3-4-7. Forfeit of matching grant funds.
(a)(1) Except as specified in paragraphs (a)(2) and (a)(3), funds in a matching grant account shall be forfeited in an amount equal to either of the following:

(A) Any nonqualified withdrawal from the corresponding participant account; or

(B) any rollover distribution to another qualified tuition plan from the corresponding participant account.

(2) If any nonqualified withdrawal or rollover distribution closes a participant account, the corresponding matching grant account shall be closed and its entire balance shall be forfeited.

(3) Any account owner who contributes more than the maximum matching grant amount may make a nonqualified withdrawal or rollover distribution of the excess contribution without forfeiting funds from the matching grant account.

(b) If the treasurer determines that the account owner has made a material misrepresentation on the application, all matching grant funds resulting from the application shall be forfeited.

(c) If a participant account ever becomes reportable as unclaimed property under K.S.A. 58-3934 et seq. and amendments thereto or the unclaimed property laws of any other state, the remaining balance in the corresponding matching grant account shall be forfeited.

(d) For participants who are enrolled in the matching grant program on or after January 1, 2010, if the account owner changes the beneficiary of the participant account, all funds in the corresponding matching grant account shall be forfeited regardless of when the matching grant was provided by the state.

(e) All forfeited funds shall be returned to the Kansas postsecondary education savings trust fund.
This regulation shall be effective on and after January 1, 2010. (Authorized by and implementing K.S.A. 2008 Supp. 75-650, as amended by 2009 SB 225, sec. 1; effective, T-3-6-29-06, June 29, 2006; effective Oct. 27, 2006; amended Jan. 1, 2010.)