85-1808 Participation agreement; cancellation; when; effect. - Nebraska Statutes

85-1808. Participation agreement; cancellation;when; effect.(1) A participant may cancel a participationagreement at will. The trustee shall determine and collect a refund penaltyby deducting the refund penalty from the returned funds. Collected refundpenalties shall be deposited in the expense fund.(2) Upon the occurrence of any of the following circumstances, no refundpenalty shall be levied by the trust in the event of a refund or terminationof a participation agreement:(a) Death of the beneficiary;(b) Permanent disability or mental incapacity of the beneficiary;(c) The beneficiary is awarded a scholarship as defined in section 529of the Internal Revenue Code, but only to the extent the refund of earningsdoes not exceed the scholarship amount; or(d) A qualified rollover is made as permitted by section 529 of theInternal Revenue Code, except that if a qualified rollover is made into aplan sponsored by another state or entity, the participation agreement shallbe deemed to have been canceled for purposes of subdivision (8)(c) ofsection 77-2716 and federal adjusted gross income shall be increased to theextent previously deducted as a contribution to the trust.(3) In the event of cancellation of a participation agreement for anyof the causes listed in subsection (2) of this section, the participant shallbe entitled to receive the principal amount of all contributions made by theparticipant under the participation agreement plus the actual program fundinvestment income earned on the contributions, less any losses incurred onthe investment. Notwithstandingany other provisions of this section, under no circumstances shall a participantor beneficiary receive a refund or distribution that is more than the fairmarket value of the specific account on the applicable liquidation date. SourceLaws 2000, LB 1003, § 8; Laws 2001, LB 750, § 4; Laws 2003, LB 574, § 30; Laws 2005, LB 216, § 20; Laws 2010, LB197, § 6.Operative Date: July 1, 2010