1Amending the act of April 3, 1992 (P.L.28, No.11), entitled, as
2amended, "An act providing for the establishment of two
3programs for postsecondary educational savings, a guaranteed
4savings program and an investment program; establishing the
5Tuition Account Programs Bureau within the Treasury
6Department and providing duties for the Treasury Department;
7establishing tuition account funds; providing for Tuition
8Account Program Contracts; providing for the establishment of
9scholarship programs; and further providing for duties of the
10Pennsylvania Higher Education Assistance Agency," further
11providing for general provisions governing both tuition
12account programs <-and for State tax exemption.

13The General Assembly of the Commonwealth of Pennsylvania
14hereby enacts as follows:

<-15Section 1. Section 309.2 of the act of April 3, 1992 (P.L.

1628, No.11), known as the Tuition Account Programs and College
17Savings Bond Act, added June 22, 2000 (P.L.418, No.58), is
18amended to read:

<-19Section 1. Sections 309.2 and 316 of the act of April 3, 
201992 (P.L.28, No.11), known as the Tuition Account Programs and 
21College Savings Bond Act, amended or added June 22, 2000
 

1(P.L.418, No.58), are amended to read:

2Section 309.2. General provisions governing both tuition
3account programs.

4(a) Levy, execution and security for loans.--A tuition
5account, any state-qualified tuition program plan or any legal
6interest therein shall not be subject to attachment, levy or
7execution by any creditor of [an] any account owner or
8beneficiary and shall not be used as security for a loan.

9(b) Period of participation.--Notwithstanding any of the
10provisions of this chapter, the following shall apply:

11(1) Except as provided in paragraph (2), a minimum
12period of one year must elapse between the time a
13contribution is made pursuant to a Tuition Account Program
14Contract and the time that contribution and any increase in
15its value may be used for payment of qualified higher
16education expenses pursuant to section 309 or 309.1.

17(2) The board may prescribe an alternative minimum
18period of time which must elapse between a contribution and
19its use for payment of qualified higher education expenses.

20(c) Student aid.--Any amounts contributed pursuant to a
21Tuition Account Program Contract, any state-qualified tuition 
22program plan and any increase in the value thereof shall not be
23used in calculating personal asset contributions for determining
24eligibility and need for student loan programs, student grant
25programs or other student aid programs administered by any
26agency of the Commonwealth, except as otherwise may be provided
27by Federal law.

28(d) Excess contributions.--The department shall institute
29adequate safeguards to prevent contributions to an account or
30multiple accounts that are in excess of those necessary to

1provide for the qualified higher education expenses of the
2beneficiary of that account or accounts, as specified in section
3529 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 
4U.S.C. § 529).

5(e) Cash contributions.--A contribution made pursuant to a
6Tuition Account Program Contract may only be made in cash, which
7may at the department's discretion include checks, money orders,
8credit cards or other similar methods.

9(f) Transfers between programs.--The department, pursuant to
10a Tuition Account Program Contract, may specify the terms and
11conditions under which transfers of contributions and any
12increased value thereof may be made from one account to another
13by an account owner who has entered into a Tuition Account
14Guaranteed Savings Program Contract and a Tuition Account
15Investment Program Contract. Nothing in this subsection shall be
16construed to require the department to allow such transfers.

<-17Section 316. State tax exemption.

18(a) Property of funds.--The property of each of the funds
19and their income and operation shall be exempt from all taxation
20by the Commonwealth and its political subdivisions.

21(b) Contributions.--Contributions made pursuant to a Tuition
22Account Program Contract or a "qualified State tuition program" 
23as defined by section 529 of the Internal Revenue Code of 1986 
24(Public Law 99-514, 26 U.S.C. § 529); any increase in the value
25of those contributions, the retention, or transfer during life
26or as a result of death of any legal interest in a Tuition
27Account Program Contract or a "qualified State tuition program" 
28as defined by section 529 of the Internal Revenue Code of 1986;
29and payment of qualified higher education expenses of
30beneficiaries made pursuant to Tuition Account Program Contracts

1or a "qualified State tuition program" as defined by section 529 
2of the Internal Revenue Code of 1986 shall be exempt from all
3taxation by the Commonwealth and its political subdivisions.

4Section 2. The amendment of section 316 of the act shall
5apply to the transfer of property by a decedent on or after the
6effective date of this section.

7Section <-2 3. This act shall take effect in 60 days.