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ACT NO. 79

(H.427)

Higher Education Savings Plan; Taxation

This act establishes the Vermont Higher Education Savings Plan to be administered by the Vermont Student Assistance Corporation (VSAC). The Vermont Higher Education Savings Plan is intended to qualify as a qualified state tuition program eligible for favorable tax treatment under the Section 529 of the Internal Revenue Code. Under the plan, VSAC is directed to establish savings plans and enter into savings plan participation agreements with participants, or donors, for contributions for the payment of post-secondary education costs of a designated beneficiary. The savings shall be invested by VSAC, shall specify a rate of return according to the terms of the participation agreement, and shall be utilized only for post-secondary education costs of the beneficiary. The assets and income earned on the assets of the savings plans held by VSAC are exempt from taxation by the state and eligible for tax benefits provided under the federal Internal Revenue Code. VSAC is directed to develop educational programs and informational materials for participants, enter into agreements with post-secondary education institutions, and invest funds in appropriate investment vehicles to effectuate the Vermont Higher Savings Plan.

Effective Date: Taxation provisions, January 1, 1999