PRINTER'S NO. 4051
No. 2815 Session of 1986
INTRODUCED BY LANGTRY, POTT AND McVERRY, OCTOBER 1, 1986
REFERRED TO COMMITTEE ON EDUCATION, OCTOBER 1, 1986
AN ACT
1 Providing for a savings program for college education and
2 creating the Individual Education Account Fund.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Individual
7 Education Account Act.
8 Section 2. Definitions.
9 The following words and phrases when used in this act shall
10 have the meanings given to them in this section unless the
11 context clearly indicates otherwise:
12 "Account." An individual education account under section 3.
13 "Depositor." A person who opens an account.
14 "Fund." The Individual Education Account Fund created in
15 section 4.
16 Section 3. Accounts.
17 (a) Establishment.--A parent or guardian of a child may
1 establish an individual education account with any bank or
2 savings and loan association for the child. An account is a
3 trust with the parent or guardian as settlor, the child as
4 beneficiary and the bank or savings and loan association as
5 trustee. A maximum of $1,000 may be deposited in an account in a
6 year. The money in the account including accrued interest may
7 not exceed the sum of $30,000.
8 (b) Administration.--The bank or savings and loan
9 association shall administer accounts as follows:
10 (1) Disbursements shall be made to accredited
11 institutions of higher education on behalf of the child at
12 the direction of the depositor.
13 (2) If the child who is the beneficiary of an account
14 does not attend an accredited institution of higher
15 education, the money in the account shall be returned to the
16 depositor at the direction of the depositor after the
17 following deductions are made:
18 (i) A service charge in the amount of 0.75% of the
19 money. This subparagraph shall not apply if the child
20 does not attend college because of death or physical or
21 mental incapacity.
22 (ii) The applicable personal income tax under
23 section 302.2 of the act of March 4, 1971 (P.L.6, No.2),
24 known as the Tax Reform Code of 1971.
25 (3) Money in an account which exceeds the total amount
26 under subsection (a) shall be returned to the depositor after
27 the following deductions are made:
28 (i) A service charge of 0.75% of the money which is
29 in excess.
30 (ii) The applicable personal income tax under
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1 section 302.2 of the Tax Reform Code of 1971.
2 Section 4. Fund.
3 (a) Creation.--The Individual Education Account Fund is
4 created. The fund shall consist of the money deposited in
5 accounts under section 3 and interest earned on that money.
6 (b) Administration.--The bank or savings and loan
7 association shall administer the fund to do all of the
8 following:
9 (1) Insure the availability of accumulated assets.
10 (2) Invest the money to earn a reasonable rate of
11 return.
12 (3) Credit accounts with proportional interest.
13 (4) Administer accounts under section 3(b).
14 (5) Conform to Federal tax law to secure the maximum tax
15 benefits for depositors.
16 Section 5. Regulations.
17 The Department of Revenue may promulgate regulations to
18 implement this act.
19 Section 6. Effective date.
20 This act shall take effect in 60 days.
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