S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    511
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 9, 2019
                                ___________
 
 Introduced  by Sens. CARLUCCI, SAVINO -- read twice and ordered printed,
   and when printed to be committed to the Committee on Higher Education
 
 AN ACT to amend the education law, the  state  finance  law,  the  civil
   practice  law  and  rules and the tax law, in relation to establishing
   the New York state pre-paid tuition plan
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. The education law is amended by adding a new section 355-d
 to read as follows:
   § 355-D. "NEW YORK STATE PRE-PAID TUITION PLAN". 1. DEFINITIONS.   FOR
 THE PURPOSES OF THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE FOLLOW-
 ING MEANINGS:
   A.  "ACCOUNT"  OR  "PRE-PAID TUITION ACCOUNT" SHALL MEAN AN INDIVIDUAL
 PRE-PAID TUITION ACCOUNT ESTABLISHED IN ACCORDANCE WITH  THE  PROVISIONS
 OF THIS SECTION.
   B.  "ACCOUNT  OWNER"  SHALL  MEAN  A PERSON WHO ENTERS INTO A PRE-PAID
 TUITION AGREEMENT PURSUANT TO THE PROVISIONS OF THIS ARTICLE,  INCLUDING
 A  PERSON  WHO  ENTERS INTO SUCH AN AGREEMENT AS A FIDUCIARY OR AGENT ON
 BEHALF OF A TRUST, ESTATE, PARTNERSHIP, ASSOCIATION, COMPANY  OR  CORPO-
 RATION.  THE ACCOUNT OWNER MAY ALSO BE THE DESIGNATED BENEFICIARY OF THE
 ACCOUNT.
   C. "CITY UNIVERSITY" SHALL MEAN THE CITY UNIVERSITY OF NEW YORK.
   D. "COMPTROLLER" SHALL MEAN THE STATE COMPTROLLER.
   E. "DESIGNATED BENEFICIARY" SHALL MEAN, WITH RESPECT TO AN ACCOUNT  OR
 ACCOUNTS,  THE  INDIVIDUAL  DESIGNATED  AS  THE INDIVIDUAL WHOSE TUITION
 EXPENSES ARE EXPECTED TO BE PAID FROM THE ACCOUNT OR ACCOUNTS.
   F. "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.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06275-01-9

 S. 511                              2
 
   G. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION  AUTHORIZED  TO
 DO BUSINESS IN THE STATE AND (I) WHICH IS AN AUTHORIZED FIDUCIARY TO ACT
 AS  A  TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED
 "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY
 BE  AMENDED  FROM TIME TO TIME, OR AN INSURANCE COMPANY; AND (II) (A) IS
 LICENSED OR CHARTERED BY THE DEPARTMENT OF FINANCIAL  SERVICES,  (B)  IS
 CHARTERED  BY AN AGENCY OF THE FEDERAL GOVERNMENT, (C) IS SUBJECT TO THE
 JURISDICTION AND REGULATION OF THE SECURITIES AND EXCHANGE COMMISSION OF
 THE FEDERAL GOVERNMENT, OR (D) IS ANY OTHER ENTITY OTHERWISE  AUTHORIZED
 TO  ACT  IN THIS STATE AS A TRUSTEE PURSUANT TO THE PROVISIONS OF AN ACT
 OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT  OF  1974"
 AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME.
   H. "MEMBER OF FAMILY" SHALL MEAN A FAMILY MEMBER AS DEFINED IN SECTION
 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
   I.  "NONQUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT,
 BUT SHALL NOT MEAN:
   (I) A QUALIFIED WITHDRAWAL; (II) A WITHDRAWAL MADE AS  THE  RESULT  OF
 THE  DEATH OR DISABILITY OF THE DESIGNATED BENEFICIARY OF AN ACCOUNT; OR
 (III) A WITHDRAWAL MADE ON THE ACCOUNT OF A SCHOLARSHIP.
   J. "PLAN" SHALL MEAN THE NEW YORK STATE PRE-PAID TUITION  PLAN  ESTAB-
 LISHED PURSUANT TO THIS SECTION.
   K.  "PLAN MANAGER" SHALL MEAN A FINANCIAL ORGANIZATION SELECTED BY THE
 COMPTROLLER TO ACT AS A DEPOSITORY AND MANAGER OF THE PLAN.
   L. "QUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN  ACCOUNT  TO
 PAY THE QUALIFIED TUITION EXPENSES OF THE DESIGNATED BENEFICIARY.
   M. "STATE UNIVERSITY" SHALL MEAN THE STATE UNIVERSITY OF NEW YORK.
   N.  "TUITION"  SHALL MEAN ANY MANDATORY CHARGES IMPOSED BY AN ELIGIBLE
 EDUCATIONAL INSTITUTION FOR ATTENDANCE FOR AN ACADEMIC YEAR AS A  CONDI-
 TION  OF  ENROLLMENT.  SUCH TERM SHALL NOT INCLUDE LABORATORY FEES, ROOM
 AND BOARD, OR OTHER SIMILAR FEES AND CHARGES.
   O. "TUITION SAVINGS AGREEMENT" SHALL MEAN  AN  AGREEMENT  BETWEEN  THE
 COMPTROLLER OR A FINANCIAL ORGANIZATION AND AN ACCOUNT OWNER.
   2.  POWERS AND DUTIES OF THE COMPTROLLER. THE COMPTROLLER SHALL ADMIN-
 ISTER THE PLAN AND SHALL DEVELOP AND IMPLEMENT PROGRAMS FOR THE PRE-PAY-
 MENT OF UNDERGRADUATE TUITION, AT A FIXED, GUARANTEED LEVEL FOR APPLICA-
 TION AT ANY TWO-YEAR OR FOUR-YEAR ELIGIBLE  EDUCATIONAL  INSTITUTION  AS
 DEFINED IN SECTION 529 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
 OR OTHER APPLICABLE FEDERAL LAW. IN ADDITION, THE COMPTROLLER SHALL HAVE
 THE POWER AND DUTY TO:
   A.  DEVELOP  AND  IMPLEMENT  THE  PLAN IN A MANNER CONSISTENT WITH THE
 PROVISIONS OF THIS SECTION THROUGH RULES AND REGULATIONS ESTABLISHED  IN
 ACCORDANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT;
   B.  MAKE  ARRANGEMENTS  WITH THE STATE UNIVERSITY, CITY UNIVERSITY AND
 ANY ELIGIBLE EDUCATIONAL INSTITUTION  LOCATED  WITHIN  THE  STATE  WHICH
 CHOOSES  TO  PARTICIPATE,  TO FULFILL OBLIGATIONS UNDER PRE-PAID TUITION
 CONTRACTS FOR TWO-YEAR OR FOUR-YEAR DEGREE PROGRAMS, INCLUDING, BUT  NOT
 LIMITED TO, PAYMENT FROM THE PLAN OF THE THEN ACTUAL IN-STATE UNDERGRAD-
 UATE  TUITION  COST  ON  BEHALF OF A QUALIFIED BENEFICIARY OF A PRE-PAID
 TUITION CONTRACT TO THE INSTITUTION IN WHICH SUCH BENEFICIARY IS  ADMIT-
 TED AND ENROLLED, AND APPLICATION OF SUCH BENEFITS TOWARDS GRADUATE-LEV-
 EL TUITION AND TOWARDS TUITION COSTS AT SUCH ELIGIBLE EDUCATIONAL INSTI-
 TUTIONS,  AS  THAT  TERM  IS  DEFINED  IN  26  U.S.C. § 529 OR ANY OTHER
 APPLICABLE SECTION OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,  AS
 DETERMINED  BY  THE  COMPTROLLER  IN  HIS  OR  HER SOLE DISCRETION. SUCH
 ARRANGEMENTS MUST INCLUDE PLANS THAT ALLOW AN  ACCOUNT  OWNER  TO  ENTER
 INTO  CONTRACTS  IN WHICH HE OR SHE CAN PURCHASE TUITION IN INSTALLMENTS

 S. 511                              3
 
 EQUAL TO THE COST OF SEMESTERS AS A FULL  TIME  STUDENT,  BUT  CAN  ALSO
 INCLUDE  PLANS  THAT  WOULD  ALLOW  FOR  THE  PRE-PAYMENT OF TUITION FOR
 TUITION CREDIT HOURS;
   C.  ENGAGE THE SERVICES OF CONSULTANTS ON A CONTRACT BASIS FOR RENDER-
 ING PROFESSIONAL AND TECHNICAL ASSISTANCE AND ADVICE;
   D. SEEK RULINGS AND OTHER GUIDANCE FROM THE UNITED  STATES  DEPARTMENT
 OF TREASURY AND THE INTERNAL REVENUE SERVICE RELATING TO THE PROGRAM;
   E.  MAKE  CHANGES  TO THE PLAN REQUIRED FOR THE PARTICIPANTS TO OBTAIN
 THE FEDERAL INCOME TAX BENEFITS OR TREATMENT PROVIDED BY SECTION 529  OF
 THE  INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR ANY SIMILAR SUCCESSOR
 LEGISLATION;
   F. CHARGE, IMPOSE AND COLLECT ADMINISTRATIVE FEES AND SERVICE  CHARGES
 IN  CONNECTION  WITH  ANY AGREEMENT, CONTRACT OR TRANSACTION RELATING TO
 THE PLAN;
   G. DEVELOP MARKETING PLANS AND PROMOTION MATERIAL;
   H. ESTABLISH THE METHODS BY WHICH THE FUNDS HELD IN SUCH  ACCOUNTS  BE
 DISBURSED;
   I.  ESTABLISH  THE METHOD BY WHICH FUNDS SHALL BE ALLOCATED TO PAY FOR
 ADMINISTRATIVE COSTS; AND
   J. DO ALL THINGS NECESSARY AND PROPER TO CARRY  OUT  THE  PURPOSES  OF
 THIS SECTION.
   3. PLAN REQUIREMENTS. EVERY PRE-PAID TUITION ACCOUNT SHALL COMPLY WITH
 THE PROVISIONS OF THIS SECTION.
   A.  A PRE-PAID TUITION ACCOUNT MAY BE OPENED BY ANY PERSON WHO DESIRES
 TO ENTER INTO A CONTRACT FOR  PRE-PAYMENT  OF  TUITION  EXPENSES  AT  AN
 INSTITUTION  OF THE STATE UNIVERSITY, THE CITY UNIVERSITY OR ANY PARTIC-
 IPATING ELIGIBLE EDUCATIONAL INSTITUTION. AN ACCOUNT OWNER MAY DESIGNATE
 ANOTHER PERSON AS SUCCESSOR OWNER OF THE ACCOUNT IN  THE  EVENT  OF  THE
 DEATH OF THE ORIGINAL ACCOUNT OWNER. SUCH PERSON WHO OPENS AN ACCOUNT OR
 ANY SUCCESSOR OWNER SHALL BE CONSIDERED THE ACCOUNT OWNER.
   B.  AN APPLICATION FOR SUCH ACCOUNT SHALL BE IN THE FORM PRESCRIBED BY
 THE COMPTROLLER AND CONTAIN THE FOLLOWING:
   (I) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFI-
 CATION NUMBER OF THE ACCOUNT OWNER;
   (II) THE DESIGNATION OF A DESIGNATED BENEFICIARY;
   (III) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OF  THE  DESIGNATED
 BENEFICIARY; AND
   (IV) SUCH OTHER INFORMATION AS THE COMPTROLLER MAY REQUIRE.
   C. THE COMPTROLLER MAY ESTABLISH A NOMINAL FEE FOR SUCH APPLICATION.
   D.  ANY PERSON, INCLUDING THE ACCOUNT OWNER, MAY MAKE CONTRIBUTIONS TO
 AN ACCOUNT AFTER THE ACCOUNT IS OPENED.
   E. CONTRIBUTIONS TO ACCOUNTS MAY BE MADE ONLY IN CASH.
   F. FOUR YEARS MUST ELAPSE BETWEEN  THE  ESTABLISHMENT  OF  A  PRE-PAID
 TUITION  ACCOUNT AND THE TIME THE FIRST QUALIFIED WITHDRAWAL IS MADE FOR
 THE PAYMENT OF TUITION EXPENSES.
   G. AN ACCOUNT OWNER MAY WITHDRAW ALL OR PART OF THE  BALANCE  FROM  AN
 ACCOUNT ON SIXTY DAYS NOTICE OR SUCH SHORTER PERIOD AS MAY BE AUTHORIZED
 UNDER RULES GOVERNING THE PLAN. SUCH RULES SHALL INCLUDE PROVISIONS THAT
 WILL  GENERALLY ENABLE THE DETERMINATION AS TO WHETHER A WITHDRAWAL IS A
 NONQUALIFIED WITHDRAWAL OR A QUALIFIED WITHDRAWAL.
   H. AN ACCOUNT OWNER  MAY  CHANGE  THE  DESIGNATED  BENEFICIARY  OF  AN
 ACCOUNT  TO  AN  INDIVIDUAL  WHO  IS A MEMBER OF THE FAMILY OF THE PRIOR
 DESIGNATED BENEFICIARY IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY  THE
 COMPTROLLER.
   I.  AN  ACCOUNT  OWNER  MAY TRANSFER ALL OR A PORTION OF AN ACCOUNT TO
 ANOTHER FAMILY TUITION ACCOUNT, THE SUBSEQUENT DESIGNATED BENEFICIARY OF

 S. 511                              4
 
 WHICH IS A MEMBER OF THE FAMILY AS DEFINED IN SECTION 529 OF THE  INTER-
 NAL REVENUE CODE OF 1986, AS AMENDED.
   J.  THE  PLAN  SHALL  PROVIDE  SEPARATE ACCOUNTING FOR EACH DESIGNATED
 BENEFICIARY.
   K. NO ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF ANY ACCOUNT SHALL  BE
 PERMITTED TO DIRECT THE INVESTMENT OF ANY CONTRIBUTIONS TO AN ACCOUNT OR
 THE EARNINGS THEREON.
   L.  NEITHER AN ACCOUNT OWNER NOR A DESIGNATED BENEFICIARY SHALL USE AN
 INTEREST IN AN ACCOUNT AS SECURITY FOR A LOAN. ANY PLEDGE OF AN INTEREST
 IN AN ACCOUNT SHALL BE OF NO FORCE AND EFFECT.
   M. (I) IF THERE IS ANY DISTRIBUTION FROM AN ACCOUNT TO ANY  INDIVIDUAL
 OR  FOR  THE  BENEFIT  OF  ANY  INDIVIDUAL  DURING A CALENDAR YEAR, SUCH
 DISTRIBUTION SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE  AND  THE
 ACCOUNT  OWNER,  THE  DESIGNATED  BENEFICIARY  OR THE DISTRIBUTEE TO THE
 EXTENT REQUIRED BY FEDERAL LAW OR REGULATION.
   (II) STATEMENTS SHALL BE PROVIDED TO EACH ACCOUNT OWNER AT LEAST  ONCE
 EACH  YEAR WITHIN SIXTY DAYS AFTER THE END OF THE TWELVE MONTH PERIOD TO
 WHICH THEY RELATE. THE STATEMENT SHALL IDENTIFY THE  CONTRIBUTIONS  MADE
 DURING  A PRECEDING TWELVE MONTH PERIOD, THE TOTAL CONTRIBUTIONS MADE TO
 THE ACCOUNT THROUGH THE END OF THE PERIOD, THE VALUE OF THE  ACCOUNT  AT
 THE  END  OF  SUCH PERIOD, DISTRIBUTIONS MADE DURING SUCH PERIOD AND ANY
 OTHER INFORMATION THAT THE COMPTROLLER SHALL REQUIRE TO BE  REPORTED  TO
 THE ACCOUNT OWNER.
   (III)  STATEMENTS  AND  INFORMATION  RELATING  TO  ACCOUNTS  SHALL  BE
 PREPARED AND FILED TO THE EXTENT REQUIRED BY FEDERAL AND STATE TAX LAW.
   N. (I)  A  LOCAL  GOVERNMENT  OR  ORGANIZATION  DESCRIBED  IN  SECTION
 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, MAY OPEN AND
 BECOME  THE ACCOUNT OWNER OF AN ACCOUNT TO FUND SCHOLARSHIPS FOR PERSONS
 WHOSE IDENTITY WILL BE DETERMINED UPON DISBURSEMENT.
   (II) IN THE CASE OF ANY ACCOUNT OPENED PURSUANT TO PARAGRAPH A OF THIS
 SUBDIVISION THE REQUIREMENT SET FORTH IN THIS SUBDIVISION THAT A  DESIG-
 NATED  BENEFICIARY  BE  DESIGNATED  WHEN  AN ACCOUNT IS OPENED SHALL NOT
 APPLY AND EACH INDIVIDUAL WHO RECEIVES AN INTEREST IN SUCH ACCOUNT AS  A
 SCHOLARSHIP SHALL BE TREATED AS A DESIGNATED BENEFICIARY WITH RESPECT TO
 SUCH INTEREST.
   O. AN ANNUAL FEE MAY BE IMPOSED UPON THE ACCOUNT OWNER FOR THE MAINTE-
 NANCE OF THE ACCOUNT.
   P.  THE  PLAN  SHALL  DISCLOSE THE FOLLOWING INFORMATION IN WRITING TO
 EACH ACCOUNT OWNER AND PROSPECTIVE ACCOUNT OWNER OF A  PRE-PAID  TUITION
 ACCOUNT:
   (I)  THE  TERMS  AND  CONDITIONS  FOR  PURCHASING  A  PRE-PAID TUITION
 ACCOUNT;
   (II) ANY RESTRICTIONS ON THE SUBSTITUTION OF BENEFICIARIES;
   (III) THE PERSON OR ENTITY ENTITLED TO TERMINATE THE TUITION  PRE-PAY-
 MENT AGREEMENT;
   (IV)  THE  PERIOD OF TIME DURING WHICH A BENEFICIARY MAY RECEIVE BENE-
 FITS UNDER THE TUITION PRE-PAYMENT AGREEMENT;
   (V) THE TERMS AND CONDITIONS  UNDER  WHICH  MONEY  MAY  BE  WHOLLY  OR
 PARTIALLY  WITHDRAWN  FROM  THE PLAN, INCLUDING, BUT NOT LIMITED TO, ANY
 REASONABLE CHARGES AND FEES THAT MAY BE IMPOSED FOR WITHDRAWAL;
   (VI) THE PROBABLE TAX CONSEQUENCES ASSOCIATED  WITH  CONTRIBUTIONS  TO
 AND DISTRIBUTIONS FROM ACCOUNTS; AND
   (VII)  ALL  OTHER  RIGHT  AND OBLIGATIONS PURSUANT TO PRE-PAID TUITION
 AGREEMENTS, AND ANY OTHER TERMS, CONDITIONS AND PROVISIONS DEEMED NECES-
 SARY AND APPROPRIATE BY THE COMPTROLLER PURSUANT TO THIS SUBDIVISION.

 S. 511                              5
 
   Q. PRE-PAID TUITION SAVINGS AGREEMENTS SHALL  BE  SUBJECT  TO  SECTION
 FOURTEEN-C  OF  THE  BANKING  LAW AND THE "TRUTH-IN-SAVINGS" REGULATIONS
 PROMULGATED THEREUNDER.
   R.  NOTHING  IN THIS ARTICLE OR IN ANY PRE-PAID TUITION SAVINGS AGREE-
 MENT ENTERED INTO PURSUANT TO THIS ARTICLE SHALL BE CONSTRUED AS A GUAR-
 ANTEE BY THE STATE OR ANY COLLEGE THAT A BENEFICIARY WILL BE ADMITTED TO
 A COLLEGE OR UNIVERSITY, OR, UPON ADMISSION TO A COLLEGE WILL BE PERMIT-
 TED TO CONTINUE TO ATTEND OR WILL RECEIVE A DEGREE  FROM  A  COLLEGE  OR
 UNIVERSITY.
   4.  STATE  GUARANTEE. A. NOTHING IN THIS SECTION SHALL ESTABLISH OR BE
 DEEMED TO ESTABLISH ANY OBLIGATION OF THE STATE, THE COMPTROLLER OR  ANY
 AGENCY  OR INSTRUMENTALITY OF THE STATE TO GUARANTEE ANY BENEFITS TO ANY
 ACCOUNT OWNER OR DESIGNATED BENEFICIARY.
   B. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS  SECTION,
 IN  ORDER  TO  ENSURE THAT THE PLAN IS ABLE TO MEET ITS OBLIGATIONS, THE
 GOVERNOR SHALL INCLUDE IN THE BUDGET SUBMITTED PURSUANT TO SECTION TWEN-
 TY-TWO OF THE STATE FINANCE LAW, AN  APPROPRIATION  SUFFICIENT  FOR  THE
 PURPOSE  OF  ENSURING  THAT  THE PLAN CAN MEET ITS OBLIGATIONS. ANY SUMS
 APPROPRIATED FOR SUCH PURPOSE SHALL BE  TRANSFERRED  TO  THE  PLAN.  ALL
 AMOUNTS PAID INTO THE PLAN PURSUANT TO THIS SUBDIVISION SHALL CONSTITUTE
 AND  BE  ACCOUNTED FOR AS ADVANCES BY THE STATE TO THE PLAN AND, SUBJECT
 TO THE RIGHTS OF THE PLAN'S CONTRACT HOLDERS, SHALL  BE  REPAID  TO  THE
 STATE  WITHOUT  INTEREST FROM AVAILABLE OPERATING REVENUE OF THE PLAN IN
 EXCESS OF AMOUNTS REQUIRED FOR THE PAYMENT OF  THE  OBLIGATIONS  OF  THE
 PLAN.  AS  USED IN THIS SECTION, "OBLIGATIONS OF THE PLAN" MEANS AMOUNTS
 REQUIRED FOR THE PAYMENT OF CONTRACT BENEFITS OR  OTHER  OBLIGATIONS  OF
 THE  PLAN,  THE  MAINTENANCE OF THE PLAN, AND OPERATING EXPENSES FOR THE
 CURRENT FISCAL YEAR.
   § 2. The state finance law is amended by adding a new section 78-c  to
 read as follows:
   §  78-C. NEW YORK STATE PRE-PAID TUITION PLAN 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 PRE-PAID TUITION PLAN FUND. ALL
 PAYMENTS FROM SUCH FUND SHALL BE MADE IN ACCORDANCE WITH  SECTION  THREE
 HUNDRED FIFTY-FIVE-D OF THE EDUCATION LAW.
   2.  (A) THE COMPTROLLER SHALL INVEST THE ASSETS OF THE FUND IN INVEST-
 MENTS AUTHORIZED BY ARTICLE FOUR-A OF THE RETIREMENT AND SOCIAL SECURITY
 LAW, PROVIDED HOWEVER, THAT:
   (I) THE PROVISIONS OF PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION  ONE
 HUNDRED  SEVENTY-SEVEN  OF  THE RETIREMENT AND SOCIAL SECURITY LAW SHALL
 NOT APPLY EXCEPT FOR SUBPARAGRAPH  (II)  OF  SUCH  PARAGRAPH;  AND  (II)
 NOTWITHSTANDING  THE  PROVISIONS  OF  SUBDIVISION  SEVEN  OF SECTION ONE
 HUNDRED SEVENTY-SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW  OR  ANY
 OTHER LAW TO THE CONTRARY, THE ASSETS OF THE FUND MAY BE INVESTED IN ANY
 FUNDING  AGREEMENT  ISSUED IN ACCORDANCE WITH SECTION THREE THOUSAND TWO
 HUNDRED TWENTY-TWO OF THE INSURANCE LAW BY  A  DOMESTIC  LIFE  INSURANCE
 COMPANY  OR  A  FOREIGN  LIFE  INSURANCE  COMPANY DOING BUSINESS IN THIS
 STATE, SUBJECT TO THE FOLLOWING:
   (1) SUCH A FUNDING AGREEMENT MAY PROVIDE FOR A GUARANTEED MINIMUM RATE
 OF RETURN;
   (2) SUCH A FUNDING AGREEMENT MAY BE ALLOCATED  AS  EITHER  A  SEPARATE
 ACCOUNT  OR  A  GENERAL  ACCOUNT  OF  THE ISSUER, AS THE COMPTROLLER MAY
 DECIDE;
   (3) TOTAL INVESTMENTS OF THE FUND PURSUANT TO THIS  PARAGRAPH  IN  ANY
 FUNDING  AGREEMENTS  ISSUED BY A SINGLE LIFE INSURANCE COMPANY WHICH ARE

 S. 511                              6
 
 ALLOCATED AS A GENERAL ACCOUNT OF THE ISSUER SHALL NOT,  IN  THE  AGGRE-
 GATE, EXCEED THREE HUNDRED FIFTY MILLION DOLLARS; AND
   (4) NO ASSETS OF THE FUND SHALL BE INVESTED IN ANY SUCH FUNDING AGREE-
 MENT  UNLESS, AT THE TIME OF SUCH INVESTMENT, THE GENERAL OBLIGATIONS OR
 FINANCIAL STRENGTH OF THE ISSUER HAVE RECEIVED  EITHER  THE  HIGHEST  OR
 SECOND HIGHEST RATING BY TWO NATIONALLY RECOGNIZED RATING SERVICES OR BY
 ONE NATIONALLY RECOGNIZED RATING SERVICE IN THE EVENT THAT ONLY ONE SUCH
 SERVICE RATES SUCH OBLIGATIONS.
   (B)  FUND  ASSETS  SHALL  BE KEPT SEPARATE AND SHALL NOT BE COMMINGLED
 WITH OTHER ASSETS. THE COMPTROLLER MAY ENTER INTO CONTRACTS  TO  PROVIDE
 FOR  INVESTMENT  ADVICE  AND  MANAGEMENT,  CUSTODIAL  SERVICES AND OTHER
 PROFESSIONAL SERVICES FOR THE ADMINISTRATION AND INVESTMENT OF THE PLAN.
 ADMINISTRATIVE FEES, COSTS AND EXPENSES, INCLUDING INVESTMENT  FEES  AND
 EXPENSES, SHALL BE PAID FROM THE ASSETS OF THE FUND.
   3.  THE  COMPTROLLER SHALL PROVIDE FOR THE ADMINISTRATION OF THE TRUST
 FUND,  INCLUDING  MAINTAINING  PARTICIPANT  RECORDS  AND  ACCOUNTS,  AND
 PROVIDING  ANNUAL  AUDITED  REPORTS.  THE  COMPTROLLER  MAY  ENTER  INTO
 CONTRACTS TO PROVIDE ADMINISTRATIVE SERVICES AND REPORTING.
   § 3. Section 5205 of the civil practice law and rules  is  amended  by
 adding a new subdivision (p) to read as follows:
   (P) EXEMPTION FOR NEW YORK STATE PRE-PAID TUITION PLAN MONIES.  MONIES
 IN  AN ACCOUNT CREATED PURSUANT TO SECTION THREE HUNDRED FIFTY-FIVE-D OF
 THE EDUCATION LAW ARE EXEMPT FROM APPLICATION TO THE SATISFACTION  OF  A
 MONEY JUDGMENT AS FOLLOWS:
   1.  ONE  HUNDRED  PERCENT OF MONIES IN AN ACCOUNT IN CONNECTION WITH A
 PRE-PAID TUITION PLAN ESTABLISHED PURSUANT TO SUCH  ARTICLE  IS  EXEMPT;
 AND
   2.  ONE  HUNDRED  PERCENT  OF MONIES IN AN ACCOUNT IS EXEMPT WHERE THE
 JUDGMENT DEBTOR IS THE ACCOUNT OWNER OR DESIGNATED BENEFICIARY  OF  SUCH
 ACCOUNT.
   FOR  THE  PURPOSES  OF THIS SUBDIVISION, THE TERMS "ACCOUNT OWNER" AND
 "DESIGNATED BENEFICIARY" SHALL HAVE THE MEANINGS  ASCRIBED  TO  THEM  IN
 ARTICLE FOURTEEN-A OF THE EDUCATION LAW.
   §  4. Paragraph 34 of subsection (b) of section 612 of the tax law, as
 amended by chapter 535 of the laws of 2000, subparagraph (B) as  amended
 by chapter 593 of the laws of 2003, is amended to read as follows:
   (34)  (A)  Excess  distributions received during the taxable year by a
 distributee of a family tuition account established under the  New  York
 state  college choice tuition savings program provided for under article
 fourteen-A of the education law, OR OF A PRE-PAID TUITION ACCOUNT ESTAB-
 LISHED PURSUANT TO SECTION THREE HUNDRED FIFTY-FIVE-D 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.
   (B) (i) The term "excess distributions" means distributions which  are
 not
   (I)  qualified  withdrawals  within the meaning of subdivision nine of
 section six hundred ninety-five-b OR PARAGRAPH L OF SUBDIVISION  ONE  OF
 SECTION THREE HUNDRED FIFTY-FIVE-D of the education law;
   (II)  withdrawals  made  as a result of the death or disability of the
 designated beneficiary within the meaning of subdivision ten of  section
 six  hundred  ninety-five-b OR PARAGRAPH I OF SUBDIVISION ONE OF SECTION
 THREE HUNDRED FIFTY-FIVE-D of such law; or
   (III) transfers described in paragraph b of subdivision six of section
 six hundred ninety-five-e of such law.

 S. 511                              7
 
   (ii) Excess distributions shall be deemed attributable  to  deductible
 contributions  to the extent the amount of any such excess distribution,
 when added to  all  previous  excess  distributions  from  the  account,
 exceeds the aggregate of all nondeductible contributions to the account.
   §  5. 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 and 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  choice tuition savings program provided for under article four-
 teen-A, OR TO A PRE-PAID  TUITION  ACCOUNT  PURSUANT  TO  SECTION  THREE
 HUNDRED  FIFTY-FIVE-D of the education law, to the extent not deductible
 or eligible for credit for federal income tax purposes, provided, howev-
 er, the exclusion provided for in this paragraph shall not exceed [five]
 TEN thousand dollars for an individual or head  of  household,  and  for
 married couples who file joint tax returns, shall not exceed [ten] TWEN-
 TY  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 choice tuition savings program provided for under
 article fourteen-A, OR FROM  A  PRE-PAID  TUITION  ACCOUNT  PURSUANT  TO
 SECTION  THREE  HUNDRED FIFTY-FIVE-D of the education law, to the extent
 includible in gross income for federal income tax purposes.
   § 6. This act shall take effect immediately and shall apply to taxable
 years commencing after December 31, 2019.