Bill Text: MI SB0285 | 2019-2020 | 100th Legislature | Introduced

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Bill Title: Individual income tax: other; qualified withdrawal from Michigan education savings program; conform with 2018 federal modifications. Amends secs. 2 & 16 of 2000 PA 161 (MCL 390.1472 & 390.1486).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-04-25 - Referred To Committee On Finance [SB0285 Detail]

Download: Michigan-2019-SB0285-Introduced.html

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SENATE BILL No. 285

 

 

April 25, 2019, Introduced by Senator LUCIDO and referred to the Committee on Finance.

 

 

 

     A bill to amend 2000 PA 161, entitled

 

"Michigan education savings program act,"

 

by amending sections 2 and 16 (MCL 390.1472 and 390.1486), section

 

2 as amended by 2010 PA 6.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2. As used in this act:

 

     (a) "Account" or "education savings account" means an account

 

established under this act.

 

     (b) "Account owner" means any of the following:

 

     (i) The individual who enters into a Michigan education

 

savings program agreement and establishes an education savings

 

account. The account owner may also be the designated beneficiary

 

of the account.

     (ii) A state or local government agency or instrumentality, an

 

entity exempt from taxation under section 501(c)(3) of the internal

 

revenue code, an estate or trust, or a corporation that enters into

 

a Michigan education savings program agreement and establishes an

 

education savings account.

 

     (c) "Board" means the board of directors of the Michigan

 

education trust described in section 10 of the Michigan education

 

trust act, 1986 PA 316, MCL 390.1430.

 

     (d) "Department" means the department of treasury.

 

     (e) "Designated beneficiary" means the individual designated

 

as the individual whose higher education expenses are expected to

 

be paid from the account.

 

     (f) "Eligible educational institution" means that term as

 

defined in section 529 of the internal revenue code or a college,

 

university, community college, or junior college described in

 

section 4, 5, or 6 of article VIII of the state constitution of

 

1963 or established under section 7 of article VIII of the state

 

constitution of 1963.

 

     (g) "Internal revenue code" means the United States internal

 

revenue code of 1986 in effect on January 1, 2002 2018 or at the

 

option of the taxpayer, in effect for the current year.

 

     (h) "Management contract" means the contract executed between

 

the treasurer and a program manager.

 

     (i) "Member of the family" means a family member as defined in

 

section 529 of the internal revenue code.

 

     (j) "Michigan education savings program agreement" means the

 

agreement between the program and an account owner that establishes

an education savings account.

 

     (k) "Program" means the Michigan education savings program

 

established pursuant to this act.

 

     (l) "Program manager" means an entity selected by the

 

treasurer to act as a manager of 1 or more of the savings plans

 

offered under the program.

 

     (m) "Qualified higher education expenses" means qualified

 

higher education expenses as defined in section 529 of the internal

 

revenue code.

 

     (n) "Qualified withdrawal" means a distribution that is not

 

subject to a penalty or an excise tax under section 529 of the

 

internal revenue code, a penalty under this act, or taxation under

 

the income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.532,

 

206.713, and that meets any of the following:

 

     (i) A withdrawal from an account to pay the qualified higher

 

education expenses of the designated beneficiary incurred after the

 

account is established.

 

     (ii) A withdrawal made as the result of the death or

 

disability of the designated beneficiary of an account.

 

     (iii) A withdrawal made because a beneficiary received a

 

scholarship that paid for all or part of the qualified higher

 

education expenses of the beneficiary to the extent the amount of

 

the withdrawal does not exceed the amount of the scholarship.

 

     (iv) A withdrawal made because a beneficiary attended a

 

service academy to the extent that the amount of the withdrawal

 

does not exceed the costs of the advanced education attributable to

 

the beneficiary's attendance in the service academy.

     (v) A transfer of funds due to the termination of the

 

management contract as provided in section 5.

 

     (vi) A transfer of funds as provided in section 8.

 

     (o) "Savings plan" or "plans" means a plan that provides

 

different investment strategies and allows account distributions

 

for qualified higher education expenses.

 

     (p) "Service academy" means the United States military

 

academy, Military Academy, United States naval academy, Naval

 

Academy, United States air force academy, Air Force Academy, United

 

States coast guard academy, Coast Guard Academy, or United States

 

merchant marine academy.Merchant Marine Academy.

 

     (q) "Treasurer" means the state treasurer.

 

     Sec. 16. (1) Contributions to and interest earned on an

 

education savings account are exempt from taxation as provided in

 

sections 30 and 30f section 30 of the income tax act of 1967, 1967

 

PA 281, MCL 206.30. and 206.30f.

 

     (2) Withdrawals made from education savings accounts are

 

taxable as provided in section 30 of the income tax act of 1967,

 

1967 PA 281, MCL 206.30.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Joint Resolution F

 

of the 100th Legislature becomes a part of

 

the state constitution of 1963 as provided in section 1 of article

 

XII of the state constitution of 1963.