S T A T E O F N E W Y O R K
________________________________________________________________________
7783--A
I N S E N A T E
February 23, 2018
___________
Introduced by Sens. GOLDEN, O'MARA -- read twice and ordered printed,
and when printed to be committed to the Committee on Higher Education
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee
AN ACT to amend the education law, the tax law, the state finance law,
the mental hygiene law and the civil practice law and rules, in
relation to expanding the New York state college choice tuition
savings program to include costs of elementary and secondary education
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The article heading of article 14-A of the education law,
as added by chapter 546 of the laws of 1997, is amended to read as
follows:
ARTICLE 14-A
NEW YORK STATE
[COLLEGE] EDUCATION CHOICE TUITION SAVINGS PROGRAM
§ 2. Section 695 of the education law, as added by chapter 546 of the
laws of 1997, is amended to read as follows:
§ 695. Program established. There is hereby established the [college]
EDUCATION choice tuition savings program and such program shall be known
and may be cited as the "New York state [college] EDUCATION choice
tuition savings program".
§ 3. Subdivision 5 of section 695-b of the education law, as amended
by chapter 535 of the laws of 2000, is amended to read as follows:
5. "Eligible educational institution" shall mean any institution of
higher education defined as an eligible educational institution in
section 529(e)(5) of the Internal Revenue Code of 1986, as amended, AND
ANY ELEMENTARY OR SECONDARY SCHOOL FOR WHICH TUITION EXPENSES ARE
INCLUDED WITHIN THE DEFINITION OF THE TERM QUALIFIED HIGHER EDUCATION
EXPENSES IN SECTION 529(E)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14736-03-8
S. 7783--A 2
§ 4. Subdivision 10 of section 695-e of the education law, as amended
by chapter 593 of the laws of 2003, is amended to read as follows:
10. The comptroller shall promulgate rules or regulations to prevent
contributions on behalf of a designated beneficiary in excess of an
amount that would cause the aggregate account balance for all accounts
for a designated beneficiary to exceed a maximum account balance, as
established from time to time by the comptroller and the corporation on
the basis of NONPUBLIC ELEMENTARY AND SECONDARY TUITION COSTS AND THE
higher education costs in the state, with adequate safeguards to prevent
more contributions than necessary to provide for the qualified higher
education costs of the beneficiary, as required to maintain the program
as a "qualified tuition program" under section 529 of the Internal
Revenue Code of 1986, as amended.
§ 5. Section 695-e of the education law is amended by adding a new
subdivision 17 to read as follows:
17. NOTHING IN THIS ARTICLE OR IN ANY TUITION SAVINGS AGREEMENT
ENTERED INTO PURSUANT TO THIS ARTICLE SHALL BE CONSTRUED AS A GUARANTEE
BY THE STATE OR ANY ELEMENTARY OR SECONDARY SCHOOL THAT A BENEFICIARY
WILL BE ADMITTED TO ANY ELEMENTARY OR SECONDARY SCHOOL, OR, UPON ADMIS-
SION TO AN ELEMENTARY OR SECONDARY SCHOOL WILL BE PERMITTED TO CONTINUE
TO ATTEND SUCH ELEMENTARY OR SECONDARY SCHOOL.
§ 6. Paragraphs 32 and 33 of subsection (c) of section 612 of the tax
law, paragraph 32 as amended by chapter 81 of the laws of 2008, para-
graph 33 as added by chapter 546 of the laws of 1997, are amended to
read as follows:
(32) Contributions made during the taxable year by an account owner to
one or more family tuition accounts established under the New York state
[college] EDUCATION choice tuition savings program provided for under
article fourteen-A of the education law, to the extent not deductible or
eligible for credit for federal income tax purposes, provided, however,
the exclusion provided for in this paragraph shall not exceed five thou-
sand dollars for an individual or head of household, and for married
couples who file joint tax returns, shall not exceed ten thousand
dollars; provided, further, that such exclusion shall be available only
to the account owner and not to any other person.
(33) Distributions from a family tuition account established under the
New York state [college] EDUCATION choice tuition savings program
provided for under article fourteen-A of the education law, to the
extent includible in gross income for federal income tax purposes.
§ 7. The section heading and subdivisions 1 and 2 of section 78 of
the state finance law, as added by chapter 546 of the laws of 1997, are
amended to read as follows:
New York state [college] EDUCATION choice tuition savings program
trust fund. 1. There is hereby established in the sole custody of the
state comptroller a special fund to be known as the New York state
[college] EDUCATION choice tuition savings program trust fund. All
payments from such fund shall be made in accordance with article four-
teen-A of the education law and the memorandum of understanding entered
into pursuant thereto on the audit of the state comptroller.
2. The fund shall be a trust fund and shall consist of a trust account
and an operating account. The trust account shall include amounts
received by the New York state [college] EDUCATION choice tuition
savings program pursuant to tuition savings agreements, administrative
charges, fees, and all other amounts received by the program from other
sources, and interest and investment income earned by the trust fund.
The comptroller shall, from time to time, make transfers from the trust
S. 7783--A 3
account to the operating account for the immediate payment of obli-
gations under tuition savings agreements, operating expenses and admin-
istrative costs of the New York state [college] EDUCATION choice tuition
savings program. Administrative costs shall be paid out of the operating
account according to the terms and conditions established pursuant to
the provisions of section six hundred ninety-five-c of the education
law.
§ 8. Subparagraph (A) of paragraph 34 of subsection (b) of section 612
of the tax law, as amended by chapter 535 of the laws of 2000, is
amended to read as follows:
(A) Excess distributions received during the taxable year by a distri-
butee of a family tuition account established under the New York state
[college] EDUCATION choice tuition savings program provided for under
article fourteen-A of the education law, to the extent such excess
distributions are deemed attributable to deductible contributions under
paragraph thirty-two of subsection (c) of this section.
§ 9. Paragraph 3 of subsection (d) of section 658 of the tax law, as
added by chapter 546 of the laws of 1997, is amended to read as follows:
(3) The commissioner may by regulation or instruction require the
filing of a report annually by the comptroller or program manager of the
New York state [college] EDUCATION choice tuition savings program, or
their designee, setting forth the names and identification numbers of
account owners, designated beneficiaries and distributees of family
tuition accounts, the amounts contributed to such accounts, the amounts
distributed from such accounts and the nature of such distributions as
qualified withdrawals or as withdrawals other than qualified with-
drawals, and any such other information as the commissioner may require
regarding the taxation under this article of amounts contributed to or
withdrawn from such accounts. The commissioner may require that any such
report also be made to the account owner, designated beneficiary or
distributee of any such account.
§ 10. Subdivision 3-a of section 84.05 of the mental hygiene law, as
added by chapter 149 of the laws of 2016, is amended to read as follows:
3-a. Notwithstanding the provisions of subdivision three of this
section, the comptroller may, in his or her discretion, enter into a
contract with the existing third party administrator of the [NYS
college] NEW YORK STATE EDUCATION choice tuition savings program for the
purpose of administering the NY ABLE savings account program and provid-
ing account depositories and managers. The term of such contract shall
expire on the same date as the contract for the administration of the
[NYS college] NEW YORK STATE EDUCATION choice tuition savings program
expires. Following such expiration, the comptroller may, in his or her
discretion, solicit proposals for the purpose of administering the NY
ABLE savings account program and solicit proposals for the purpose of
administering the [NYS college] NEW YORK STATE EDUCATION choice tuition
savings program jointly or separately.
§ 11. The opening paragraph of subdivision (j) of section 5205 of the
civil practice law and rules, as added by chapter 546 of the laws of
1997, is amended to read as follows:
Exemption for New York state [college] EDUCATION choice tuition
savings program trust fund payment monies. Monies in an account created
pursuant to article fourteen-A of the education law are exempt from
application to the satisfaction of a money judgment as follows:
§ 12. This act shall take effect immediately and shall apply to
contributions and distributions made on and after January 1, 2018.
