Section R7-3-507. Oversight of Financial Institutions

A.       Disclaimer of state liability. Every document pertaining to the Family College Savings Program shall clearly indicate that “The account is not insured by the state of Arizona and neither the principal deposited nor the investment return is guaranteed by the state of Arizona.” A rubber stamp may be used to imprint this language on deposit slips, account statements, payroll stubs, or other documents pertaining to the Family College Savings Program. This language may also be hand- written or typed or provided by any other method to facilitate compliance.

B.       No Investment Direction. A financial institution shall not per- mit an account owner to move funds, once deposited, that in

any way would result in investment direction under § 529 of the Code.

C.       Reporting Requirements.

1.        At least quarterly, every financial institution shall provide each account owner with a statement. The statement shall list a beginning balance, all activity during the quarter, including any interest paid or dividends earned and any penalties charged, and an ending balance. Additionally, the statement for the fourth quarter shall include the fol- lowing information: an annual beginning balance, an annual total of the interest earned or dividends paid, an annual total of any penalties charged, and a year-end bal- ance.

2.        Within the time-frames established by the Code, financial institutions, at the request of the Commission, shall pro- vide Form 1099Q to all distributees.

3.        A copy of the statement described in (C)(1) and (2) shall be sent to the Commission. Additionally, each financial institution shall provide the Commission with the infor- mation required by A.R.S. § 15-1874(F).

D.       Access to books and records. No contractor shall have access to the books and records of a financial institution or Program Manager unless the Commission or its designee first approves, with or without modification, such request for access.

E.       Non-renewal. The Commission’s failure to renew a contract with a financial institution shall not be construed as “good cause” as referred to in A.R.S. § 15-1874(I).

F.       Marketing programs.

1.        Any financial institution or group of financial institutions that wishes to engage in its own marketing program may do so provided that any proposed marketing program is first submitted to the Commission for review. If, within 30 days, the Commission does not notify the financial institution or group of financial institutions, in writing, that the proposed marketing program is rejected or requires modifications, the proposed marketing program shall be deemed approved.

2.        Any financial institution or group of financial institutions that chooses to engage in its own marketing program may

petition the Commission for a credit against future mar- keting fees.

Historical Note

Adopted effective December 21, 1998, under an exemp- tion from the Administrative Procedure Act pursuant to

A.R.S. § 15-1852(C) (Supp. 98-4). Amended by exempt rulemaking at 8 A.A.R. 3743, effective August 8, 2002

(Supp. 02-3). Amended by exempt rulemaking at 9

A.A.R. 3886, effective August 14, 2003 (Supp. 03-3).