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.