September 23-24, 1999
ITEM 104-105-R0999 Contract Amendment-Service Provider Agreement-Montana Family Education Savings Program
THAT:The Board of Regents of the Montana University System authorizes the following contract amendment to the Provider Agreement-Montana Family Education Savings Program.
Section V(F) is amended to read:
application Program fees as promulgated to be charged by the BOR in its rules or policies. Except for non-qualified withdrawal fees, Oone-half of such application all Program fees shall remain with CSB and one-half shall be remitted to the BOR or deposited into an account in the name of the BOR as reasonably directed by the BOR. All non-qualified withdrawal fees shall be remitted in their entirety to the BOR. If the BOR elects not to charge an application fee, then all other Program fees will be remitted in their entirety to the BOR.
Section V(M) is amended to read:
CSB shall waive for Montana residents only any CollegeSure CD early redemption penalties relating to non-qualified withdrawals. CSB may charge reasonable early redemption penalties relating to qualified withdrawals, if applicable.
EXPLANATION: These contract changes have been reviewed and recommended by the Oversight Committee for the Montana Family Education Savings Program. The first contract amendment clarifies the disposition of non-qualified withdrawal fees and other Program fees. This amendment also requires that all (rather than one-half) of other Program fees be remitted to the BOR if the BOR elects not to charge application fees. This will increase program revenue to partially offset the loss of revenue from the application fee if it is eliminated.
The second contract amendment allows the CSB to charge early redemption penalties related to non-resident non-qualified withdrawals. Montana residents that make non-qualified withdrawals face a Montana recapture tax that is a disincentive to early redemption. Non-resident account owners do not have the same recapture disincentive.