15-62-201. Program requirements -- establishment of account -- qualified and nonqualified withdrawal -- penalties. (1) The program must be established in the form determined by the board and may be divided into multiple investment portfolios.

(2) If the program is divided into multiple portfolios as provided in subsection (1), the debts, liabilities, obligations, and expenses incurred, contracted for, or otherwise existing with respect to a particular portfolio must be enforceable against the assets of that portfolio only and not against the assets of the program generally, if:

(a) distinct records are maintained for each portfolio; and

(b) the assets associated with each portfolio are accounted for separately from the other assets of the program.

(3) The program must be operated through use of accounts in the trust established by account owners. Contributions to the trust for participation in the program must be made by account owners pursuant to participation agreements and may be made only in cash or a cash equivalent. A person who wishes to open an account in the program shall:

(a) enter into a participation agreement pursuant to which an account will be established under the trust; and

(b) make the minimum contribution required by the board or by opening an account.

(4) Separate records and accounting must be maintained for each account.

(5) A contributor to, account owner of, or designated beneficiary of an account may not direct the investment of any contributions to any account or the earnings generated by the account in violation of section 529 of the Internal Revenue Code, 26 U.S.C. 529, and may not pledge the interest of an account or use an interest in an account as security for a loan.

(6) If there is any distribution from an account to any person or for the benefit of any person during a calendar year, the distribution must be reported to the internal revenue service and the account owner or the designated beneficiary to the extent required by federal law.

(7) At least annually, the board shall issue to each account holder a statement that provides a separate accounting for each qualified designated beneficiary with respect to each account providing:

(a) the beginning balance;

(b) contributions to the account;

(c) withdrawals from the account during the previous year; and

(d) ending investment account value.

(8) Statements and information returns relating to accounts must be prepared and filed to the extent required by federal or state tax law or by administrative rule.

(9) A state or local government or organizations described in section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), may, without designating a designated beneficiary, open and become the account owner of an account to fund scholarships for persons whose identity will be determined after an account is opened.