You Control the Account
The Purchaser
- Is the owner of the account and has control over how and when Tuition Units: Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure. are used.
- May change the Benficiary: The person designated by the Purchaser under a Prepaid Tuition Contract as the person for whom undergraduate tuition and required fees will be paid to an Eligible Educational Institution when authorized by the Purchaser. to another qualified Beneficiary.
- May cancel the account and request a refund.
Once you open an account, you can invite the entire family, as well as friends, to : to your Beneficiary’s account. The Plan makes it easy for your relatives and friends to give Tuition Units: Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure. to your Benficiary: The person designated by the Purchaser under a Prepaid Tuition Contract as the person for whom undergraduate tuition and required fees will be paid to an Eligible Educational Institution when authorized by the Purchaser. on special occasions, such as holidays, birthdays and graduations. And though the family will help you save, you will control how the money is spent.
Are there any tax consequences of a contract cancellation or refund?
The earnings portion of a
Request a Refund:
For all units held at least three years (and for contracts cancelled due to the Beneficiary’s death, disability, receipt of scholarship or admission to a U.S. Military Academy), the Purchaser will receive the Refund Value, which is an amount equal to the price you paid for the unit plus or minus adjusted net investment earnings or losses on that amount, with the earnings rate set annually by the Board at a rate that is up to 2% less than the actual net earnings, is capped at 5%, and is net of any fees due and payable. The earnings portion of a Refund is also subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Earnings may only be paid on a refund subject to the actuarial soundness of the fund. Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
For units that do not meet the three-year holding period requirement, the Purchaser will receive the Reduced Refund Value. It will be limited to the lesser of (1) the price you paid for the unit, or (2) the price you paid for the unit, plus or minus net investment earnings or losses on that amount, and is net of any fees due and payable. This means the Reduced Refund Value will not include any positive net earnings, but can be less than the purchase price if there have been periods of negative returns in the market. Reduced Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
, if any, is subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply.
What are the tax consequences of transferring ownership of my account to a new Purchaser?
You should consult with a qualified tax advisor concerning the potential income, gift and estate tax consequences of a transfer of ownership of your account before carrying out such a transfer. Under Texas law, a Purchaser may not sell the contract.