Tenn. Comp. R. & Regs. 1700 — Treasury

Chapter 1700-01 Repealed

Tenn. Comp. R. & Regs. 1700-01 Repealed

RULES

OF TENNESSEE DEPARTMENT OF TREASURY -- 1 of 1 --

Chapter 1700-02-01 Regulations Governing the Uniform Unclaimed Property Act

Tenn. Comp. R. & Regs. 1700-02-01-.01 DEFINITIONS

The following definitions are applicable to this chapter:

(1) “The Act” means the Uniform Unclaimed Property Act found at T.C.A. §§ 66-29-101 et. seq.

(2) “Apparent Owner” shall have the meaning as in T.C.A. § 66-29-102(1).

(3) “Finder” means a party who enters into an agreement with an owner of Property whereby the owner pays a fee or other remuneration to the party for locating, delivering, recovering or assisting in the recovery of Property.

(4) “Holder” shall have the meaning as in T.C.A. § 66-29-102(10).

(5) “Examiner” shall mean the party conducting an examination of a Holder’s books and records pursuant to the Act, which shall be either the Treasurer or a private examination firm.

(6) “Person” shall have the meaning as in T.C.A. § 66-29-102(23).

(7) “Property” shall have the meaning as in T.C.A. § 66-29-102(24).

(8) “Report” means a report required by T.C.A. § 66-29-123.

(9) “Security” shall have the meaning as in T.C.A. § 66-29-102(27).

(10) “Treasurer” shall have the meaning as in T.C.A. § 66-29-102(31).

(11) “Unclaimed Property Division” means the Tennessee Department of Treasury, Division of Unclaimed Property.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 30, 2010; effective February 28, 2011. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.02 REPORTS

(1) Holders shall submit to the Treasurer Reports required by T.C.A. § 66-29-123 and any voluntary reports under T.C.A. § 66-29-138 electronically through the Unclaimed Property Division’s online portal in the format prescribed on the portal. Property that is not timely reported and remitted by a Holder on the first reporting date after the Property is presumed abandoned shall be reported upon discovery of the omission. A Report will be deemed not timely received and filed under the Act if:

(a) It is submitted after the required filing date;

(b) Payment is made after the required filing date;

(c) It is submitted in a form other than the form authorized by these rules; or (d) It is incomplete or otherwise does not meet the requirements of the Act.

(2) Negative Reports. Any Person which in any year does not hold Property subject to the Act may file a signed statement to that effect using the Unclaimed Property Division’s electronic portal.

(3) Cashier’s Checks. For purposes of the Act, the owner of a cashier’s check shall be deemed to be the Person who is in possession of the instrument, provided such Person is either the purchaser or the payee of the check. Any Report that includes a cashier’s check shall include the name and address, if known, of both the payee and the purchaser of the check.

(4) Safe Deposit Boxes. Any Holder who removes contents from a safe deposit box, vault or other safe deposit receptacle in accordance with the procedures set forth in T.C.A. § 45-2- 907(b), shall provide an initial report to the Treasurer electronically using the Unclaimed Property Division’s electronic portal but shall not deliver any Property to the Treasurer at that time. After the Holder has complied with the requirements of T.C.A. § 45-2-907(d), including holding the Property for one (1) year, the Holder shall file a final report with the Unclaimed Property Division in the form prescribed by the Treasurer; and deliver any proceeds and remaining Property to the Treasurer, including any savings bonds and military medals. The information required to be in the initial and final reports pursuant to this rule shall include:

(a) A listing of the full names of the respective lessees in alphabetical order, according to their surnames;

(b) The relationship between the lessees, if known to the lessor;

(c) The name and address of any other Person who, according to the lessor’s records, may have an interest in the box’s contents;

(d) The lessee’s Social Security number, if known to the lessor;

(e) The identifying number used by the lessor for the safe deposit box;

(f) The date the box was opened and inventoried; and (g) A brief description of the Property.

History

Authority: T.C.A. §§ 45-2-907, 64-2913, 66-29-104, 66-29-123, 66-29-124, 66-29-125(b), 66-29-134, 66-29-138, 66-29-152(a), and 66-29-157.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed September 4, 1996; effective January 28, 1997. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.03 DELIVERY OF PROPERTY

Except as provided in T.C.A. § 66-29-134 of the Act or otherwise herein, all Property other than tangible Property, Securities or savings bonds required to be delivered to the Treasurer pursuant to the Act shall be remitted by ACH (Automated Clearing House) payments or other electronic means prescribed by the Treasurer.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113(a) and (d), 66-29-130, and 66-29-134.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 22, 1988; effective December 28, 1988. Amendment filed January 18, 1990; effective May 1, 1990. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.04 SECURITIES

(1) The Treasurer shall provide written instructions to the Holder for the remittance of a particular Security.

(2) All Securities remitted to the Treasurer shall include all dividends, interest, warrants or other rights, or associated cash payable by check or electronically as prescribed by the Treasurer.

(3) Holders shall deliver Securities in such form that future earnings from those Securities will be delivered in the form of cash rather than an increase in the number of shares.

(4) Holders shall deliver Securities to the Treasurer in such form that will empower the Treasurer to sell or otherwise negotiate the Securities at any time to the extent necessary to effectuate the purposes of the Act.

(5) Due to the short time period within which Securities are held under the Act prior to their sale, the Treasurer shall not vote proxies received in connection with Securities delivered to the Unclaimed Property Division.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, 66-29-130, and 66-29-134(h).
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed August 31, 2000; effective December 29, 2000. Amendment filed September 30, 2010; effective February 28, 2011. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.05 CUSTODY BY TREASURER

(1) For all Property having a minimum value of Fifty Dollars ($50.00) that is held by the Treasurer, the Treasurer shall provide notice to the Apparent Owner meeting the requirements of T.C.A. § 66-29-130.

(2) For all Property having a minimum value of Twenty-Five Dollars ($25.00) that is held by the Treasurer, the Treasurer shall list the names of the Apparent Owners on a website or database electronically searchable by the public.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, 66-29-130(a), and 66-29-130(b)(4).
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 22, 1988; effective December 28, 1988. Amendment filed September 4, 1996; effective January 28, 1997. Amendment filed August 31, 2000; effective December 29, 2000. Repeal filed September 30, 2010; effective February 28, 2011. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.06 CLAIMS

(1) Method of Filing. Except as provided in T.C.A. § 66-29-152(b), any Person claiming any Property held by the Treasurer pursuant to the Act must file a claim on the form prescribed by the Unclaimed Property Division and must include all supporting documentation required by the Unclaimed Property Division. By submitting a claim, the claimant is asserting that the claimant is the true owner of the Property. If a claimant knowingly makes any false statement with respect to a claim, the claimant shall repay the Unclaimed Property Division the amount of the claim upon request and shall indemnify the Treasurer and the State of Tennessee in the event of a successful claim to such Property by another claimant.

(2) In the event the claim is incomplete and remains incomplete for thirty (30) days after it is filed, the Unclaimed Property Division may close the claim. In the event a claim is closed, the claimant may file a new claim regarding the same Property.

(3) Proof of Ownership. As part of a claim filed under Rule 1700-02-01-.06(1), the following information may be required by the Unclaimed Property Division to prove ownership of the Property:

(a) Driver’s license or other photo identification;

(b) Document proving claimant’s tax identification number;

(d) Last will and testament;

(e) Evidence of probate distribution or letters testamentary;

(f) Marriage certificate;

(g) Divorce decree;

(h) Documentation providing a connection with the reported address or business for the year cited as the date of last transaction in the Report;

(i) Copy of contract;

(j) Guardianship or trust agreement;

(k) Income tax returns and other tax records;

(l) Court records;

(m) An affidavit executed by an individual other than the claimant having knowledge of, and in support of, a claim when requested information or documentation is not available;

(n) Copies of checks, passbooks, or safe deposit box rental agreements;

(o) Stock certificates and broker statements;

(p) Insurance policies;

(q) Invoices and bills of lading; and (r) Any other documentation necessary to support the claim, as requested by the Unclaimed Property Division.

(4) Local Government Refunds. Any person claiming an interest in property for which funds have been delivered by the Unclaimed Property Division to a local government or cooperative pursuant to T.C.A. §§ 66-29-146(c) and 66-29-146(d) shall file such claim with the local government or cooperative in receipt of the funds.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, 66-29-130, 66-29-146, 66-29-153, and 66-29-152.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Amendment filed August 31, 2000; effective December 29, 2000. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.07 EXAMINATION OF BOOKS AND RECORDS

(1) Factors the Treasurer may consider in determining whether to commence an examination or participate in an examination initiated by another state regarding a Person pursuant to T.C.A. § 66-29-158 include, but are not limited to:

(a) Whether the Person fails to report types of unclaimed Property typically reported by like Persons;

(b) Whether amounts on a Holder’s Report or amounts remitted from the Holder are not comparable to those received from similar Holders;

(c) Whether governmental agencies or other reliable sources have provided information indicating that a Person may be holding unclaimed Property that has not been reported;

(d) Whether the Unclaimed Property Division has received evidence or complaints of failure by the Person to send any required notice to an Apparent Owner; and (e) Whether an examination has been initiated by another state or more than one state.

(2) The Unclaimed Property Division shall provide written notice of the examination to the Person under examination at least thirty (30) days prior to the commencement of the examination. The notice shall include the contact information for both the examination firm (if applicable) and the Unclaimed Property Division.

(3) The Examiner shall contact the Person subject to examination to schedule an entrance conference. At the entrance conference, the Examiner shall provide the Person with the following information:

(a) Identification of other states (if any) participating in the examination;

(b) Tentative timeline and duration of the examination;

(d) Identification of the potential types of records subject to examination;

(e) Identification of the time period subject to examination; and (f) Explanation of the examination methods, including estimation techniques that may be used by the examination firm for those periods where records are not available or are insufficient.

(4) The examination may include, but shall not be limited to:

(a) Records of current accounts, dormant accounts and accounts that may have been closed and archived;

(b) Verification of contractual agreements regarding the deduction of service charges; increases or decreases in account value; and interest payments;

(5) If a Person subject to examination does not maintain the records required by T.C.A. § 66-29- 126 and the records of the Person available for the periods covered by the examination are insufficient to permit the preparation of the Report, the Treasurer may determine the Person’s liability under the Act based on the amount the Treasurer reasonably estimates, on the basis of any available records of the Person or by any other reasonable method of estimation, should have been but was not reported. Prior to the conclusion of the examination, the Examiner shall provide written notice to the Person containing the estimation methodology to be used and for which years during the time period covered by the examination estimation will be used. The Person subject to examination may object to the estimation methodology by following the process outlined in T.C.A. § 66-29-163.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, 66-29-130, and 66-29-158.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.08 FINDERS’ AGREEMENTS

(1) Any agreement between an owner of Property and a Finder for the recovery of Property not yet held by the Treasurer pursuant to the Act is enforceable only if, in addition to the information required by T.C.A. § 66-29-176, it also:

(a) Disclosed that, absent the agreement, the Property deemed abandoned under the Act would be required to be delivered to the Unclaimed Property Division for safekeeping, and that the owner would be able to recover the Property without charge and without utilizing the Finder’s services;

(b) Informs the Apparent Owner that he or she may obtain additional information about unclaimed Property programs by visiting the Unclaimed Property Division’s website; and (c) Provides that the Finder shall deliver to the Apparent Owner evidence that the Finder has all required licenses to perform the services under the agreement.

(2) Any agreement between an owner of Property and a Finder for the recovery of Property held by the Treasurer pursuant to the Act is enforceable only if, in addition to the information required by T.C.A. § 66-29-176, it also:

(a) Provides that, for any successful claim through the efforts of the Finder pursuant to the agreement, the Unclaimed Property Division will direct the full amount of payment to the Apparent Owner and not to the Finder; and (b) Provides that the Finder shall deliver to the Apparent Owner evidence that the Finder has all required licenses to perform the services under the agreement.

(3) A Finder shall submit evidence of the Finder’s required licensure with any claim filed with the Unclaimed Property Division.

History

Authority: T.C.A. §§ 66-29-104, 66-29-113(f), 66-29-116, 66-29-130, and 66-29-176.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Repeal and new rule filed December 29, 2005; effective April 28, 2006. Repeal and new rule filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.09 REPEALED

History

Authority: T.C.A. §§ 64-2913, 64-2917, and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.18 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-112, 66-29-130, and 66-29-136.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed August 31, 2000; effective December 29, 2000. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.19 DUTIES OF HOLDERS

(1) Before filing the annual report of property presumed abandoned, the holder shall exercise due diligence to ascertain the whereabouts of the owner to prevent abandonment from being presumed. “Due diligence” is defined herein as the degree of care which a reasonably prudent man would exercise in the normal course of business operations.

(a) Evidence that the location of the owner cannot be ascertained may be the return of a first-class or superior mailing sent to the owner’s last known address.

(b) First-class or superior mailings to owners in the ordinary course of the holder’s business which are not returned as “undeliverable” shall constitute contact with the owner, and shall constitute an indication of interest in the property in accordance with the Act. Examples of such mailings include, but are not limited to, computerized statements of account and statements of interest earnings required by the Internal Revenue Service.

History

Authority: T.C.A. §§ 66-29-104(1)(C), 66-29-104(2)(C), 66-29-104(3)(A), 66-29-109, 66-29-113(e), and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; to have been effective March 4, 2019. However, the rule was withdrawn on February 21, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.20 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-107, 66-29-115, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 24, 1990; effective December 29, 1990. Amendment filed August 31, 2000; effective December 29, 2000. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.39 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-107, 66-29-119, and 66-29-130.
Administrative History: Original rule filed December 29, 2005; effective April 28, 2006. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.10 REPEALED

History

Authority: T.C.A. §§ 64-2903 and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.11 REPEALED

History

Authority: T.C.A. §§ 66-29-104 and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.12 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-113, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.13 REPEALED

History

Authority: T.C.A. §§ 64-2903, 64-2913, and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal by Public Chapter 575; effective July 1, 1986. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.14 REPEALED

History

Authority: T.C.A. §§ 64-2929 and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal by Public Chapter 575; effective July 1, 1986. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.15 REPEALED

History

Authority: T.C.A. §§ 64-2921 and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal by Public Chapter 575; effective July 1, 1986. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.16 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-112, 66-29-113, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.17 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-106, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.21 REPEALED

History

Authority: T.C.A. §§ 64-2914 and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal by Public Chapter 575; effective July 1, 1986. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.22 REPEALED

History

Authority: T.C.A. §§ 64-2929 and 66-29-104.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.23 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-116, and 66-29-130.
Administrative History: Original rule filed October 26, 1978; effective January 29, 1979. Amendment filed September 24, 1990; effective December 29, 1990. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.24 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.25 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.26 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.27 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.28 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-119, and 66-29-130.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Amendment filed September 24, 1990; effective December 29, 1990. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.29 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.30 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.31 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-119, and 66-29-130.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Amendment filed September 24, 1990; effective December 29, 1990. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.32 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.33 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-119, and 66-29-130.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 24, 1990; effective December 29, 1990. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.34 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.35 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.36 REPEALED

History

Authority: T.C.A. §§ 64-2919 and 66-29-104.
Administrative History: Original rule filed January 29, 1981; effective April 29, 1981. Repeal filed September 4, 1996; effective January 28, 1997. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.37 REPEALED

History

Authority: T.C.A. §§ 45-2-907, 66-29-104, 66-29-104(4)(A), 66-29-115(c), and 66-29-130.
Administrative History: Original rule filed August 31, 2000; effective December 29, 2000. Amendment filed December 29, 2005; effective April 28, 2006. Repeal filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-02-01-.38 REPEALED

History

Authority: T.C.A. §§ 66-29-104, 66-29-122, and 66-29-130.
Administrative History: Original rule filed December 29, 2005; effective April 28, 2006. Amendment filed September 30, 2010; effective February 28, 2011. Repeal filed December 4, 2018; effective March 4, 2019.

Chapter 1700-03-01 Tennessee Consolidated Retirement System

Tenn. Comp. R. & Regs. 1700-03-01-.01 CORRECTION OF PARTICIPATION ERRORS MADE BY EMPLOYERS

(1) Error Corrections. The retirement system shall correct errors in its records that relate to participation in the retirement system and shall make any necessary corrections so that employer and employee contributions are the correct amount in the retirement system records. The retirement system shall also correct the amount of an employee’s service credit in its records so that the retirement system’s records accurately reflect the employee’s required participation in the retirement system or the correct plan within the retirement system.

(2) Determination of Errors. The retirement system shall determine whether an error has occurred in the retirement system records on a case-by-case basis based on consideration of the following factors, including, but not limited to:

(a) The authenticity of the documents provided to demonstrate the alleged error;

(b) The length of time the employee has not participated in the retirement system or has participated in the incorrect retirement system plan;

(c) The reason for the alleged error relative to participation in the retirement system; and (d) The effect of the alleged error on the employee, the employer and the retirement system.

(3) Recoupment of Underpayments. The retirement system shall correct any errors resulting in underpayments of contributions to the retirement system in accordance with the procedures for qualified plans as established by the Internal Revenue Service in Revenue Procedure 2016-51, and subsequent amendments thereto, as follows:

(a) An underpayment to the retirement system resulting from an error in failing to accurately report the employee to the retirement system or the correct plan within the retirement system, shall be recouped by the retirement system by obtaining the underpaid employee and employer contributions. The retirement system may recoup the underpaid employee and employer contributions, including applicable interest, from any one or a combination of the following:

The employee;
The employee’s employer; or 3. A third party that is a governmental entity.

(b) The retirement system shall recoup interest relative to an underpayment; however, under extraordinary circumstances, the retirement system may waive interest, in whole or in part, based on consideration of the following factors, including, but not limited to:

The length of time the underpayment has occurred;
The reason for the underpayment;
The amount of the underpayment;
The financial effect that recouping the applicable interest would have on the employee, the employee’s employer or a third party;
The impact on the retirement system’s ability to provide retirement benefits;
Whether the payment of interest would cause a financial hardship;
Whether there would be recoupment by the retirement system from more than one source; and 8 Whether the recoupment complies with Internal Revenue Service regulations, procedures and guidelines.

(c) The interest rate shall be the assumed actuarial interest rate of return established by the Board under T.C.A. § 8-34-505 at the time the payment is made. The retirement system may recoup the interest from a source or combination of sources listed in subparagraph (3)(a) of this rule that is different from the source or sources for the underpaid contributions.

(d) The retirement system shall document its consideration of the factors contained in paragraph (2) and subparagraph (3)(b) in this rule in an individualized plan of correction for each employee affected by an underpayment of contributions. The plan of correction shall demonstrate how the employee has been restored to the position that the employee would have been in if the employee had participated in the retirement system in accordance with the retirement system plan document.

(4) Failure of Employer to Pay Underpaid Employer Contributions. Should an employer fail to pay its underpaid contributions or fail to pay any underpaid contributions based on the determination of the director of the retirement system, the retirement system may collect the underpaid contributions for which the employer is responsible through any means provided under applicable law.

(5) Right to Appeal. Any individual or entity affected by an action or decision made by the retirement system relative to the payment of underpaid contribution amounts, may appeal the action or decision to the director in accordance with Tenn. Comp. R. & Reg. Chapter 1700-3- 2.

(6) Purchase of Prior Service Credit. If an employee was required to be a member of the retirement system as a condition of employment, but was not accurately reported to the retirement system, the employee shall establish prior service credit in the retirement system for the period of time that he or she should have been participating in the retirement system or within the correct retirement system plan. The payment of both employee and employer contributions must be paid to establish the prior service credit back to the date the employee should have participated in the retirement system. The payments of employee and employer contributions or interest, or both for the prior service credit, may come from any one or a combination of the sources listed in subparagraph (3)(a) of this rule; however, this will in no way require the employee to pay for the employer contributions. The purchase of prior service credit will consist of the following payments: the underpaid employee and employer contributions and interest paid on the underpaid contributions at the assumed actuarial interest rate of return established by the Board under T.C.A. § 8-34-505 at the time the payment is made, unless payment of interest is waived. Under extraordinary circumstances, the retirement system may waive the recoupment of interest relative to the purchase of prior service credit, in whole or in part, based on consideration of the factors contained in subparagraph (3)(b) of this rule.

History

Authority: T.C.A. §§ 8-34-313, 8-35-101, 8-35-203(a)(1), 8-36-115, and 8-37-214.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996. Amendments filed February 1, 2018; effective May 2, 2018.

Tenn. Comp. R. & Regs. 1700-03-01-.02 OMISSION FROM ACTUARIAL STUDY

(1) Whenever a political subdivision extends coverage to its employees and discovers there were some employees who were erroneously omitted from the actuarial study, the employees will be allowed to be covered and receive whatever prior service the governing body authorized under the following conditions:

(a) The responsible official is requested to furnish this office with a letter explaining that the affected employees were omitted from the actuarial study through error; and (b) The political subdivision will assume the increase in the employer liability by adding the omitted employees.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.03 PENALTY ASSESSMENT

(1) The amount set forth in T.C.A. § 8-37-504 will be assessed by the Retirement Division against any employer who fails twice during any twenty-four month period to forward payroll data, or to pay the requisite amount of contributions to the Retirement Division. An employer will be deemed to have failed to forward the above whenever a contribution report is postmarked after the tenth day of the month following the month in which contributions are deducted or ten (10) calendar days after the contribution report form is mailed to the employer by the Retirement Division, if later.

(2) A warning letter will be sent to the employer by the Retirement Division the first time a contribution report or payment is late during any twenty-four month period. The letter will inform the employer that an amount will be assessed if another report or payment is late during the twenty-four month period.

(3) Any amount assessed hereunder may be waived by the Director of the Retirement Division upon presentation of adequate documentation from the employer indicating the report and/or payment was late because of a unique problem or situation.

History

Authority: T.C.A. §§ 8-34-313, 8-37-502, 8-37-503, and 8-37-504.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.04 REPEALED

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986.

Tenn. Comp. R. & Regs. 1700-03-01-.05 ISSUANCE OF CHECK FOR MONTH OF DEATH

All retirement allowances shall be payable in equal monthly installments and shall cease in the month in which the payee dies, unless otherwise specifically provided for in T.C.A., Title 8, Chapters 34-37. A retirement allowance shall be issued for the month in which the payee dies and shall be paid in accordance with T.C.A. § 8-36-120.

History

Authority: T.C.A. §§ 8-34-101(34) and 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.06 REPEALED

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986.

Tenn. Comp. R. & Regs. 1700-03-01-.07 COMPUTATION OF BENEFITS

When retirement benefits are computed in accordance with T.C.A. § 8-36-110, and such computation results in a total benefit which is less than the benefit determined on total years of service under Group 1, the retirement allowance payable to such member shall be the benefit determined under Group 1 using the total years of service from all classes or systems.

This shall apply to Group 2, Group 3 and all superseded systems except for Prior Class B limited where the member chooses to only contribute on the first $4,200 of annual salary.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.08 APPEAL OF DISABILITY DENIALS

If a disability applicant is denied, an appeal must be filed within ninety (90) days after notification of the denial has been made. If an appeal is not filed within this period, the right to appeal the original application is waived. This does not prohibit the member from filing a new disability application at a later date.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.09 DISABILITY RETIREES REQUIRED TO SUBMIT REPORT OF ANNUAL EARNINGS

Any disability retiree who fails to submit a report of annual earnings within ninety (90) days after the initial request shall have his retirement benefits suspended until the report of annual earnings is received. If the report is subsequently submitted and the earnings do not exceed the applicable limit, benefits will be paid retroactive to the date benefits were suspended.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.10 SUSPENSION OF DISABILITY BENEFITS

If a disability retiree is re-evaluated and it is determined that the retiree’s condition has improved to the extent that he no longer qualifies for disability benefits, the benefits shall be suspended at the end of the month next following the completion of the re-evaluation.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.11 COST OF LIVING ADJUSTMENTS FOR RETIREE WHO RETURNS TO SERVICE

Any retiree who returns to service and subsequently retires again will not be eligible for a cost of living adjustment unless such person has been in receipt of a retirement allowance at any time during the twelve (12) months immediately preceding the date on which the cost of living adjustment is granted.

History

Authority: T.C.A. §§ 8-34-313, 8-36-701, 8-36-801, 8-36-802, and 8-36-803.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.12 CHANGE FROM REGULAR PLAN OR SOCIAL SECURITY LEVELING TO AN

OPTIONAL RETIREMENT PLAN. T.C.A. § 8-36-603 allows a retired member who did not elect an option to do so after retirement in favor of a beneficiary. If the retiree originally selected the regular plan or social security leveling, he may change from such plan to an optional form of retirement (Options I-IV) by making a payment equal to the difference in benefits received and the optional plan. However, a retiree cannot change from the regular or maximum plan to social security leveling.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.13 CHANGE OF RETIREMENT PLAN WITHIN SIXTY (60) DAYS AFTER EFFECTIVE

DATE OF RETIREMENT OR THE DATE OF THE RETIREMENT NOTICE LETTER. Any recently retired member who has been put on retirement benefits having selected either the regular or maximum plan, social security leveling, or an optional form of retirement and who wishes to change to a different plan of retirement may do so provided the member notifies the Retirement Division within sixty (60) days after the member’s effective date of retirement or the date of the retirement notice letter, provided the member repays to the Retirement Division any benefit overpayment resulting from the change. In computing the period of time prescribed in this rule, the first day (effective date of retirement or date on the notice letter) shall be excluded and the last day of the period is to be included unless it is a Saturday, a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not a Saturday, a Sunday, or a legal holiday.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-605.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996. Amendment filed July 31, 2001; effective November 28, 2001.

Tenn. Comp. R. & Regs. 1700-03-01-.14 SOCIAL SECURITY LEVELING

In order to select the social security leveling plan of retirement, a member must have accumulated, at the time of retirement, sufficient quarters of coverage under Title II of the Federal Social Security Act to qualify for social security benefits.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-101.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986. New rule filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.15 LUMP SUM PAYMENTS FOR LEAVE OR COMPENSATORY TIME

If a member, upon termination of employment, is compensated for the member’s unused accumulated leave or compensatory time in a lump sum, no retirement contributions are to be submitted and no retirement credit will be granted for that payment. The purpose of this rule is to prevent an artificial inflation of an employee’s average final compensation upon which the employee’s retirement benefit calculation will be based.

History

Authority: T.C.A. §§ 8-34-101(14) and 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986. New rule filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.16 PAYMENT OF ACCUMULATED UNUSED SICK LEAVE UPON DEATH OF AN

EMPLOYEE. Whenever a deceased member’s unused accumulated sick leave is paid by the member’s employer to the member’s estate or to a beneficiary designated by the member for such payment, the payment shall not be considered earnable compensation for retirement purposes. The payment is considered a form of a death benefit, and not payment of service earned by the member as in the case of annual leave. Although the payment is not considered earnable compensation for retirement purposes, the unused accumulated sick leave will be credited as service pursuant to T.C.A. § 8-34-604 and used in the benefit calculation of any monthly retirement annuity which may be due upon the member’s death. If a monthly annuity is available, the date of retirement will become effective following the payment of any annual leave. This rule shall not apply to any member who is covered under the provisions of T.C.A. § 8- 35-118, or under T.C.A., Part 3, Chapter 35, Title 8.

History

Authority: T.C.A. §§ 8-34-101(14) and 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Amendment filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.17 REPEALED

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986.

Tenn. Comp. R. & Regs. 1700-03-01-.18 REPEALED

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981. Repeal by Public Chapter 575; effective July 1, 1986.

Tenn. Comp. R. & Regs. 1700-03-01-.19 POLITICAL SUBDIVISIONS’ BENEFIT COVERAGE FOR EMPLOYEES

Whenever a political subdivision is participating in the retirement system but has not provided retirement coverage for all its departments and upon the decision of the governing body to provide retirement coverage to all the remaining departments, then the employees of the remaining departments shall be under the same terms, conditions, and eligibility requirements of those employees already participating in the retirement system.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.20 COLLECTION OF OVERPAYMENTS

If a retired member or beneficiary is overpaid, an automatic payroll deduction may be initiated if arrangements for repayment are not made after contacting the member three (3) times. The deduction cannot be less than 5% of the member’s benefit or $10.00, whichever is greater.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.21 DISABILITY BENEFITS FOR HANDICAPPED EMPLOYEES

Employees that have a handicap at the time of their employment will not be eligible for disability benefits based on that condition unless the medical evidence documents that the pre-existing condition has deteriorated thereby rendering the person unemployable.

History

Authority: T.C.A. § 8-34-313.
Administrative History: Original rule filed June 30, 1981; effective August 19, 1981.

Tenn. Comp. R. & Regs. 1700-03-01-.22 EFFECTIVE DATE OF MEMBERSHIP

The membership of an employee in the retirement system shall be effective as of the first date for which employee or employer contributions are made for service rendered by the employee, provided such contributions are not later withdrawn.

History

Authority: T.C.A. §§ 8-34-313; Title 8, Chapter 35, Part 1; and Title 8, Chapter 37, Part 2.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982.

Tenn. Comp. R. & Regs. 1700-03-01-.23 WAIVER OF WAITING PERIOD FOR MEMBERSHIP

Any political subdivision which has a temporary period of employment pursuant to T.C.A. § 8-35-107 may, at its option, waive such waiting period for all employees who are already members of the retirement system by virtue of other employment. Such waiver shall be in the form prescribed by the Board of Trustees.

History

Authority: T.C.A. §§ 8-34-313 and 8-35-107.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982.

Tenn. Comp. R. & Regs. 1700-03-01-.24 ESTABLISHING CREDITABLE SERVICE

A retired member may establish additional creditable service if such service was creditable on the member’s date of retirement and is creditable at the time it is claimed. Benefits for such additional service shall not commence until the Retirement Division receives an application for the additional service with proof that the retired member meets the statutory requirements to qualify for the service. Service credit authorized by legislation enacted after a member’s retirement shall not be creditable, unless the legislation specifically provides that it applies to the retired member. A member may establish additional creditable service if such service is creditable at the time it is claimed. A member shall not be deemed to have claimed the service until the Retirement Division receives an application for the additional service with proof that the member meets the statutory requirements to qualify for the service.

History

Authority: T.C.A. §§ 8-34-313 and 8-37-214.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982. Amendment filed August 16, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-03-01-.25 ESTABLISHING DATE OF RETIREMENT

For purposes of determining rights of beneficiaries pursuant to T.C.A. §§ 8-36-107 and 8-36-109, a member shall be considered retired when he (1) terminates employment, (2) files an application for retirement, and (3) first receives benefits via direct deposit or three days have elapsed since the first benefit check was mailed. For the purposes of this rule, it shall be presumed that the check is mailed on the date indicated on the face of the check, unless shown to the contrary by competent evidence.

History

Authority: T.C.A. §§ 8-34-313, 8-36-107, and 8-36-109.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982.

Tenn. Comp. R. & Regs. 1700-03-01-.26 BENEFITS FOR AGED STATE EMPLOYEES AND TEACHERS

Former state employees and teachers claiming service under T.C.A. § 8-39-101 or § 8-39-102 shall be entitled to benefits from the date the application and certification is received or upon attainment of age 65, whichever is later.

History

Authority: T.C.A. §§ 8-34-313, 8-39-101, and 8-39-102.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982.

Tenn. Comp. R. & Regs. 1700-03-01-.27 CHANGE OF BENEFICIARY AFTER RETIREMENT

Any employee retired on the maximum plan may change his or her beneficiary by filing the appropriate form prescribed by the Board of Trustees. Any employee retired on an optional plan may change his or her beneficiary upon the death of the beneficiary. Such newly elected beneficiary shall only be entitled to any remaining accumulated contributions upon the death of the member.

History

Authority: T.C.A. §§ 8-34-313, 8-35-104, and 8-37-212(c).
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982.

Tenn. Comp. R. & Regs. 1700-03-01-.28 REPEALED

History

Authority: T.C.A. §§ 8-34-313, 8-36-107, and 8-36-109.
Administrative History: Original rule filed September 30, 1982; effective November 1, 1982. Repeal by Public Chapter 575; effective July 1, 1986.

Tenn. Comp. R. & Regs. 1700-03-01-.29 PURCHASE OF PRIOR SERVICE THROUGH MONTHLY INSTALLMENTS

A member or retired member of the Tennessee Consolidated Retirement System may establish retirement credit through monthly installments pursuant to T.C.A. § 8-37-220. The Retirement Division may begin accepting monthly installment payments pursuant to said Section effective January 1, 1997. The minimum amount of the monthly payments shall be determined by the Retirement Division, provided such amount is not less than fifty dollars and no cents ($50.00) per month.

History

Authority: T.C.A. §§ 8-34-313, 8-37-214, 8-37-220, and Chapter 660 of the Tennessee Public Acts of 1996.
Administrative History: Original rule filed August 16, 1996; effective December 27, 1996. Amendment filed August 31, 2001; effective December 28, 2001.

Tenn. Comp. R. & Regs. 1700-03-01-.30 DIRECT DEPOSIT OF BENEFITS

(1) Except as provided in Paragraphs (2) and (4) of this rule below, all monthly benefits payable under the provisions of T.C.A., Title 8, Chapters 34-37 shall be paid to recipients by electronic funds transfer. Each recipient of such payments shall complete an electronic funds transfer form as prescribed by the Retirement System whereon the recipient shall:

(a) designate one financial institution to which such payments shall be made; and (b) provide to the Retirement Division the payment information necessary for the recipient to receive electronic funds transfer payments through the institution so designated.

(2) The Retirement Division shall waive the application of Paragraph (1) of this rule if the recipient objects to receiving the benefits by electronic funds transfer and agrees to pay the Retirement Division a reasonable fee to cover the Division’s cost of processing and issuing a check. The written certification must also contain an acknowledgement by the recipient that the Division will subtract the amount of the fee from the funds due the recipient. The Retirement Division shall set the amount of the fee and may revise the same from time to time to reflect increases in postage, mailing and handling. The fee set by the Retirement Division shall not be less than fifty cents nor more than three times the first class mail postage rate.

(3) Should a recipient fail or refuse to return to the Retirement Division a properly completed electronic funds transfer form described in Paragraph (1) or fail to provide a written certification as prescribed in Paragraph (2), then the Retirement Division may apply the fee deduction pursuant to Paragraph (2) above.

(4) The requirements of Paragraph (1) of this rule shall not apply during any time period during which the benefits are required to be paid to: (i) the Internal Revenue Service on account of a tax levy, (ii) a court official under an Order of Assignment for Child Support, (iii) a Chapter Thirteen Trustee on account of a bankruptcy order, or (iv) under any other order for which the benefits can be legally assigned, attached or garnished.

(5) For purposes of this rule, the term "electronic funds transfer" means any transfer of funds, other than a transaction originated by cash, check, or similar paper instrument, that is initiated through an electronic terminal, telephone, computer, or magnetic tape, for the

purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account. The term also includes, but is not limited to, Automated Clearing House transfers and Fed Wire transfers.

(6) The application of this rule may be phased in by the Retirement Division as administratively practical.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-117(b).
Administrative History: Original rule filed August 31, 2001; effective December 28, 2001.

Tenn. Comp. R. & Regs. 1700-03-01-.31 EXAMINATION OF EMPLOYER RECORDS

All books, records and documents relative to the employment and/or compensation of employees of any employer participating in the Retirement System or of any instrumentality created by any one (1) or more such employers shall be subject to examination by the Retirement System during normal business hours through on-site review. In the alternative, and in the Retirement System’s sole discretion, such records may be provided through the mail or other methods of data transmission. The examination may be conducted by personnel of the Retirement System, the Office of the Comptroller of the Treasury or a licensed independent certified public accountant selected by the Retirement System. Such examinations shall take place as often as necessary, and to the extent necessary, in the discretion of the Retirement System, to determine compliance with the laws governing the Retirement System.

History

Authority: T.C.A. §§ 8-34-301, 8-34-313, 8-34-314, 8-34-318, and 8-35-205.
Administrative History: Original rule filed July 31, 2001; effective November 28, 2001.

Chapter 1700-03-02 Rules of Procedure for Contested Cases and Lesser Appeals

Tenn. Comp. R. & Regs. 1700-03-02-.01 SCOPE

Rules of Procedure for hearing contested cases are governed by the Rules of the Secretary of State, Chapter 1360-4-1, subject to the following definitions and procedures necessary for addressing specific topics unique to the type of cases conducted by the Tennessee Consolidated Retirement System.

History

Authority: T.C.A. §§4-5-219 and 8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.02 DEFINITIONS

(1)Administrative Judge - An impartial employee of the Treasury Department, who is licensed to practice law and is designated by the Board of Trustees for the Tennessee Consolidated Retirement System to conduct contested case proceedings pursuant to T.C.A. § § 4-5-301 et. seq., or an administrative judge from the office of the Secretary of State, or if applicable, a substitute shall be appointed in accordance with T.C.A. § § 4-5-302 and 4-5-314(e).

(2)TCRS - The Tennessee Consolidated Retirement System.

(3)State Treasurer - Agency Chair.

(4)Agency - The Board of Trustees for the Tennessee Consolidated Retirement System.

(5)Director - Director of the Division of Retirement of the Department of the Treasury or employee of the Division of Retirement designated by the State Treasurer.

(6)Contested Case - A proceeding, including a declaratory proceeding, in which the legal rights, duties or privileges of a party are required by any statute or constitutional provision to be determined by the agency after an opportunity for a hearing.

(7)Informal Conference - An “informal conference” is a proceeding held for a lesser appeal. The conference, which is before the director or a Division of Retirement employee designated by the State Treasurer, is one in which the aggrieved individual may present his/her case and show why the TCRS’s action or decision should be corrected.

(8)Lesser Appeal - If it is determined by the director that an aggrieved individual is not entitled to a contested case proceeding, his/her appeal shall be deemed a “lesser appeal” and shall be reviewed by means of an informal conference.

(9)Petitioner - The “petitioner” in a contested case is the “moving” party, i.e., the party who has initiated the proceedings. The petitioner usually bears the ultimate burden of proof and will therefore present his or her proof first at the hearing. In some cases, however, the party who initiated the proceedings will not be the party with the burden on all issues. In such cases, the administrative judge will determine the order of proceedings, taking into account the interests of fairness, simplicity and the speedy and inexpensive determination of the matter at hand.

(10)Respondent - The “respondent” in a contested case proceeding is the party who is responding to the charges or other action brought by the “petitioner”. The “respondent” is usually the TCRS.

History

Authority: T.C.A. §§4-5-219 and 8-34-313; 1988 TN Public Acts, Chapter 973, §11.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.03 RIGHT TO APPEAL

(1)Any person who is aggrieved by an action or decision made within the discretion or control of the TCRS, may appeal the action or decision to the director. Grievances shall address the TCRS’s interpretations of the law and the validity and applicability of the policies promulgated under the law as they apply to each individual’s situation. Upon application, the director shall determine, with the use of the following criteria, whether the matter should be resolved as a lesser appeal or whether to convene a contested case proceeding.

(a)Individuals appealing decisions involving issues, the resolution of which in prior instances have been attained by applying established TCRS procedural, policy or statutory guidelines, shall not be entitled to a contested case proceeding. These requests shall be deemed lesser appeals, which entitle the individual to an informal conference before the director or a Division of Retirement employee who shall be designated by the State Treasurer. Issues that shall be resolved by means of an informal conference include questions concerning creditable service, average final compensation and leaves of absence.

(b)If the substance of the individual’s appeal raises issues of first impression, a contested case proceeding may be conducted if the director determines that such issues cannot be affirmatively resolved by applying established procedural, policy or statutory guidelines.

(c)Individuals appealing decisions relative to disability pension benefits shall be entitled to a contested case proceeding before the administrative judge.

(d)A contested case proceeding may be convened at any time when required by statute or a constitutional provision.

(e)If the appeal involves factual matters or expert opinions which require the resolution of disputed credible evidence, a contested case proceeding should be convened.

(2)Individuals appealing a TCRS action or decision shall request a hearing by any clear written expression.

(3)Upon receipt of the request by the director, each individual shall be advised of:

(a)his right to administrative review by an informal conference or contested case proceeding;

(b)the methods by which an informal conference may be obtained and the criteria used to determine the availability of a contested case proceeding;

(c)his right to be represented by an attorney, if a contested case proceeding is convened, or to be assisted by an attorney, if an informal conference is held.

History

Authority: T.C.A. §§4-5-102(3) and 8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.04 TIME

Hearings shall be conducted during regular TCRS business hours and located at a time and place convenient to the individual and the director.

History

Authority: T.C.A. §§4-5-219 and 8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.05 LESSER APPEAL - INFORMAL CONFERENCE

Lesser appeals shall be heard by means of an informal conference. This is an informal procedure through which the director provides an opportunity for the aggrieved individual to express dissatisfaction with a TCRS decision or action and seek resolution of the dispute in question.

History

Authority: T.C.A. §8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.06 REQUEST FOR INFORMAL CONFERENCE

Upon receipt of a written request by an aggrieved individual for a conference, the director or Division of Retirement employee designated by the State Treasurer to respond to such requests shall send written notification of receipt of the request to the individual. He shall be informed in writing of the scheduled conference date and site. The conference shall be held within thirty (30) business days of the date of receipt of the request. An informal conference may be conducted by means of a telephone conference.

History

Authority: T.C.A. §8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.07 FINDINGS FOLLOWING AN INFORMAL CONFERENCE

The findings of the informal conference shall be made in writing within ten (10) business days following the conference and shall be in writing and address all issues raised at the conference. Documentation of the actions and decisions resulting from the informal conference shall be entered as part of the individual’s case record.

History

Authority: T.C.A. §8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.08 APPEAL OF DIRECTOR’S FINDINGS AT INFORMAL CONFERENCE

The director shall make every effort to resolve individual complaints at the informal conference level; however, should an individual wish to appeal the director’s findings he shall be informed by the director of the possibility of further administrative review through a contested case proceeding, if applicable pursuant to rule 1700-4-1-.03(1).

History

Authority: T.C.A. §8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.09 REVIEW OF INITIAL ORDERS IN CONTESTED CASES

Review of an initial order in contested cases shall be in accordance with T.C.A. § 4-5-315. However, in the event the agency fails to meet within the ten (10) day time period, the State Treasurer may give notice of the agency’s intention to review and the agency shall either affirm or reverse the State Treasurer’s action at its next meeting.

History

Authority: T.C.A. §§4-5-315 and 8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Tenn. Comp. R. & Regs. 1700-03-02-.10 EFFECT OF INITIAL ORDERS AND FINAL ORDERS IN CONTESTED CASES

(1)Initial Orders.

(a)Unless a later date is stated in the order, or a stay is granted, the initial order shall become effective upon entry.

(b)An initial order shall become a final order in accordance with T.C.A. § 4-5-314(b): 1.When after entry of the initial order, 10 days have passed and no party has filed a petition to appeal and the agency has not given written notice of its intention to review; or 2.When, after petition to appeal has been filed, the agency exercises its discretionary right not to review.

(2)Final Orders. Final orders shall become effective upon entry.

History

Authority: T.C.A. §§4-5-219, 4-5-318, and 8-34-313.
Administrative History: Original rule filed August 11, 1988; effective September 25, 1988.

Chapter 1700-03-03 Qualified Domestic Relations Orders

Tenn. Comp. R. & Regs. 1700-03-03-.01 PURPOSE

The rules in this chapter implement T.C.A. § 8-36-128.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.02 DEFINITIONS

In addition to the definitions contained in T.C.A. § 8-34-101, the following definitions are applicable to this

chapter:

(1) Alternate payee means a former spouse of a member or retiree who is recognized by a qualified domestic relations order as having a right to receive all or a portion of the benefits payable by the retirement system with respect to such member or retiree.

(2) Qualified domestic relations order (“QDRO”) has the same meaning as provided in § 414(p) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 414(p); provided, that such order may only relate to the provision of marital property rights for the benefit of the former spouse of the member or retiree.

(3) Refund means a withdrawal of the member’s accumulated contributions pursuant to T.C.A. § 8-37-210.

History

Authority: T.C.A. §§ 8-34-101, 8-34-313, 8-36-128, and 8-37-210.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.03 PAYMENT BY TCRS

The retirement system will make payment of a retirement allowance or refund only as directed by statute or by a QDRO. After the retirement system determines that an order is a QDRO, the retirement system shall make payments to the alternate payee as directed by the QDRO at the time that a member begins receiving a monthly retirement allowance or receives a refund of contributions, unless the retirement system receives a certified copy of an order from a court of competent jurisdiction that withdraws or supersedes the previous order.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016. June, 2016

Tenn. Comp. R. & Regs. 1700-03-03-.04 SUBMISSION OF ORDERS

A person who wishes to have the retirement system review a domestic relations order to determine whether it is a QDRO for the purpose of receiving retirement system payments shall submit a copy of a signed domestic relations order to the retirement system. Such order shall be on the form provided by the retirement system and must contain all requirements prescribed by these rules. The retirement system will reject any order that is not on the form provided. The copy shall be certified by the clerk of the court that entered the order. The retirement system shall not make a determination for orders not yet entered by the court.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.05 REQUIREMENTS FOR A VALID QDRO

(1) The retirement system will accept a court order as a valid QDRO if the order meets all of the following requirements:

(a) The order must relate to the provision of marital property rights for the benefit of the former spouse of the member or retiree.

(b) The order must be a certified copy of an original or amended order dated on or after the effective date of the rules in this Chapter.

(c) The order must have been issued by a court of competent jurisdiction in a divorce proceeding that provides for the distribution of property, or any proceeding to amend or enforce such a property distribution.

(d) The order must identify the Tennessee Consolidated Retirement System as the retirement system to which it is directed.

(e) The order must contain the name, address, and social security number of the member.

(f) The order must contain the name, address, and social security number of the alternate payee.

(g) The order must express any amount to be paid to the alternate payee from a member’s retirement allowance as a dollar amount per month or as a percentage per month.

(h) The order must contain the beginning and ending dates of the marriage of the member and the alternate payee and assign a portion of the member’s retirement allowance under the retirement system based upon the period of marriage.

(i) The order must contain an assignment of the retirement allowance based upon the value of a member’s entitlement under the retirement system if he or she were to retire at full retirement age utilizing the regular service retirement allowance without taking into account an early retirement penalty for his or her total creditable service through the valuation date.

(j) The order must express any amount to be paid to the alternate payee from a member’s refund as a dollar amount or as a percentage of the refund.

(k) The order must contain a provision authorizing the retirement system to increase the amount payable to the alternate payee each month based upon the alternate payee’s share of any cost of living adjustment received by the member.

June, 2016 (l) The order must contain a provision directing the director to make payment to the alternate payee in accordance with the QDRO until either the member or the alternate payee dies, whichever occurs first. The order must contain a provision that provides that the QDRO becomes null and void upon the death of the member or the alternate payee.

(2) An order that purports to require a member to terminate employment, to withdraw contributions, or to apply for retirement will not be accepted by the retirement system as a valid QDRO.

(3) The order may specify an alternative method for the parties to verify their social security numbers to the retirement system, if the court finds that omission of the numbers in the order is necessary to reduce the risk of identity theft. The order is not a QDRO if the retirement system finds that the method of verification is insufficient for the purposes of payment of benefits or reporting of income for tax purposes.

History

Authority: T.C.A. §§ 8-34-313, 8-36-128, and 8-36-206.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.06 REVIEW OF ORDERS

The director of the retirement system or the director’s designee shall review the order for compliance with requirements imposed by statute or rule. Upon completion of the review, the director or the designee shall notify the member or retiree and each alternate payee in writing of the determination.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.07 DETERMINATION OF QUALIFIED ORDER

(1) Any determination that an order is a QDRO is voidable or subject to modification if the retirement system determines that the provisions of the order have been changed or that circumstances relevant to the determination have changed.

(2) If the director or designee determines that an order is not a QDRO, the notice shall identify the provisions of the order that do not meet the requirements of applicable statutes or rules.

(3) Any determination by the director or the director’s designee that an order is not a QDRO is a final decision by the retirement system. No appeal to the board of trustees is authorized. A party adversely affected by a determination may file a motion for reconsideration with the director no later than thirty (30) days after the date such determination is rendered if the party wishes to contest the determination. The director will review the motion for reconsideration as a lesser appeal as defined in Chapter 1700-03-02.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.14 COST OF LIVING ADJUSTMENTS

The alternate payee will receive a proportionate share of any cost of living adjustment received by the member. The retirement system will calculate the amount of any adjustment payable to the alternate payee under the QDRO. The amount of any adjustment payable to the alternate payee is the percentage of adjustment due the member multiplied by the alternate payee’s monthly retirement allowance as of the date of the adjustment.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.08 EFFECT OF A VALID QDRO

(1) Retirement Allowance.

(a) After the retirement system has determined that a QDRO applying to a retirement allowance is valid, one of the following will occur:

June, 2016 1. If the member has not yet started receiving a retirement allowance, the QDRO will be placed in the member’s file and will be implemented when the first affected payment commences; or 2. If the member is already receiving a retirement allowance subject to the QDRO, payment to the alternate payee will begin on the monthly payment date prescribed in T.C.A. § 8-36-117 in the month following approval by the retirement system.

(2) Refund of Member Contributions.

(a) After the retirement system has determined that a QDRO applicable to a member’s refund is valid, one of the following will occur:

If the QDRO provides for the allocation of a refund and the member has not applied for a refund, the QDRO will be placed in the member’s file and will be implemented when payment of the affected refund is made;
If a refund application is pending when the retirement system receives a QDRO that purports to apply to the refund but the refund payment has not yet been made, the retirement system will hold the portion of the refund that would be payable to the alternate payee until it receives clarification from the court as to whether the QDRO is effective against the pending refund. It is the member’s or alternate payee’s responsibility to obtain clarification from the court and notify the retirement system of the court’s clarification; or 3. If a refund payment has already been made when the retirement system receives a QDRO that purports to apply to the refund, the QDRO shall not be effective against that refund.

History

Authority: T.C.A. §§ 8-34-313, 8-36-117, and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.09 BENEFITS AFFECTED BY A QDRO

(1) A QDRO may apply only to the following benefits administered by the retirement system:

(a) A monthly retirement allowance; or (b) A member’s refund of employee contributions.

(2) A QDRO shall not apply to any of the following:

(a) A survivor benefit;

(b) Any disability benefit;

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016. June, 2016

Tenn. Comp. R. & Regs. 1700-03-03-.10 BENEFITS RESULTING FROM RESUMING MEMBERSHIP

If a member terminates membership in the retirement system by withdrawal of contributions, the retirement system shall pay all or a portion of the amount withdrawn to any alternate payee as directed by a QDRO. If the former member later resumes membership in the retirement system, then the retirement system shall pay to an alternate payee no portion of retirement allowance payable to the member or retiree which results from the resumption of membership, even if the retirement allowance is a result in

part from reinstatement of service credit initially credited during marriage. A member who reinstates service credit by depositing amounts previously withdrawn or refunded shall deposit the entire amount withdrawn or refunded, regardless of whether a portion or all of the amount was paid to the alternate payee. The reinstatement fee shall be based on the total amount withdrawn, regardless of whether a portion or all of the amount was paid to an alternate payee.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.11 SUBMISSION OF AMENDED ORDER

If a court amends an order that the retirement system has determined to be a QDRO, the member or retiree or alternate payee shall submit a certified copy of the amended order to the retirement system.

The retirement system shall review any amended order for compliance with the requirements imposed by

rule or statute for an original order. An amended order will be applied to member benefits beginning on the date the amended order is determined by the retirement system to be valid.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.12 TERMINATION OF QDRO

The retirement system will consider a QDRO as having been terminated in any of the following situations:

(1) Upon receipt of a certified copy of a court order terminating the QDRO;

(2) Upon payment of all amounts provided for in the QDRO;

(3) When the person to whom the QDRO applies ceases to be an annuitant of the System; or (4) Upon the death of the alternate payee or the member.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016.

Tenn. Comp. R. & Regs. 1700-03-03-.13 ALTERNATE PAYEE’S INFORMATION

An alternate payee is responsible to report to the retirement system in writing each change in his or her name, residence address, and direct deposit information. When a member’s retirement allowance or refund subject to a QDRO becomes payable, the retirement system will send notice to the last address of the alternate payee reported to the retirement system that the retirement allowance or refund is payable.

Other than sending such notice, the retirement system shall have no duty to take any other action to locate an alternate payee.

History

Authority: T.C.A. §§ 8-34-313 and 8-36-128.
Administrative History: Original rule filed March 28, 2016; effective June 26, 2016. June, 2016

Chapter 1700-04-01 Bank Collateral Pool

Tenn. Comp. R. & Regs. 1700-04-01-.01 IN GENERAL

(1) Purpose. T.C.A. Title 9, Chapter 4, Part 5 enacted the Collateral Pool for Public Deposits Act of 1990. The Act creates a Collateral Pool as an alternative means for securing public deposits. The purpose of these rules is to establish requirements for admission, participation, and administration of the Collateral Pool as required by and consistent with the Act.

(2) Definitions. For the purpose of these rules:

(a) Average daily balance means the sum of the average daily demand deposits, the average daily time deposits, and the average daily savings deposits of public depositors held during the calendar month immediately preceding the current month less any applicable Federal Deposit Insurance.

(b) Average daily demand deposit means the total by account of all public funds held on a daily basis in demand deposit accounts during the calendar month immediately preceding the current month divided by the number of calendar days in the month.

Demand deposit account shall have the meaning as defined by the Board of Governors of the Federal Reserve System, Regulation D, 12 CFR 204, as amended.

The total by account of all public funds held on a daily basis in time deposit accounts during the calendar month immediately preceding the current month divided by the number of calendar days in the month; or 2. The higher of (i) the actual amount of public funds in time deposit accounts on the last day of the calendar month immediately preceding the current month; or (ii) the sum of the amount of public funds in time deposit accounts on the last day of the two (2) calendar months immediately preceding the current month divided by two (2). Time deposit accounts shall have the meaning as defined by the Board of Governors of the Federal Reserve System, Regulation D, 12 CFR 204, as amended.

(d) Average daily savings deposit means either:

The total by account of all public funds held on a daily basis in savings deposit accounts during the calendar month immediately preceding the current month divided by the number of calendar days in the month; or 2. The sum of the amount of public funds in savings deposit accounts on the last day of the two (2) calendar months immediately preceding the current month divided by two (2). Savings deposit account shall have the meaning as defined by the Board of Governors of the Federal Reserve System, Regulation D, 12 CFR 204, as amended.

(e) Federal Deposit Insurance means the sum of the insurance provided by the Federal Deposit Insurance Act on all accounts of public depositors at the qualified public depository; such insurance for public depositors shall be determined in accordance with FDIC Regulations, 12 CFR 330.14, as amended.

(f) Person qualified to conduct audits means a person who is certified or licensed to practice public accountancy. Such person may be an employee of the qualified public depository.

History

Authority: T.C.A. § 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed August 30, 1996; effective December 27, 1996.

Tenn. Comp. R. & Regs. 1700-04-01-.02 BOARD MEMBERSHIP AND OPERATIONS

(1) Board Membership.

(a) Generally. The Board shall be comprised of seven (7) members as follows: The Commissioner of Financial Institutions and the State Treasurer who serve as Ex-Officio members; one (1) representative of local government; and four (4) representatives of the banking industry. All seven (7) members shall be voting members of the Board.

(b) Local Government Representative. The local government representative shall be appointed by the State Treasurer for a two (2)-year term and shall have at least two (2) years of experience in the field of finance. The State Treasurer may select the local government representative from lists of qualified persons submitted by interested county and municipal organizations including, but not limited to, the Tennessee County Services Association, the Tennessee Municipal League and the Tennessee County Officials Association.

(c) Banking Industry Representatives. The State Treasurer shall appoint four (4) members to the Board from a list of two (2) nominees for each member position submitted by the Board of Directors of the Tennessee Bankers Association. Appointment of these members shall be effective at the time the Secretary of the Board is notified by the State Treasurer of such appointment. The Tennessee Bankers Association shall designate the initial terms of the members as one (1) year or two (2) year terms. The initial banking industry representatives shall serve the term designated by the Tennessee Bankers Association. All subsequent banking industry representatives shall serve two (2) year terms unless completing the unexpired term of a member due to a vacancy. Provided, however, a banking industry representative shall continue to serve until his successor is appointed.

(d) In determining qualified persons to fill positions on the Board appointed by the State Treasurer, the State Treasurer shall consult with the interested groups, including, but not limited to, the organizations listed in T.C.A. § 9-4-506(a)(1).

(2) Meetings.

(a) Called Meetings and Notice. The Board shall meet at the call of the chairperson or upon written request to the chairperson by four (4) members of the Board. Public notice of Board meetings shall be posted and Board meetings conducted electronically or by other means of communication shall be conducted in accordance with T.C.A. Title 8,

Chapter 44, Part 1 and other applicable laws and rules.

(b) Quorum. A quorum of the Board shall consist of four (4) members of the Board.

Notwithstanding the presence of a quorum, where these rules require certain actions to be taken by a specified number of votes, the action may not be taken unless the requisite number of votes is cast.

(c) Presiding Officer. The Chairman shall preside at all meetings of the Board. In the Chairman’s absence, the Vice-Chairman shall preside.

(d) Executive Session. In the event that information deemed confidential pursuant to T.C.A. § 9-4-518(e) is to be discussed by the Board, the Board shall meet in executive session pursuant to T.C.A. § 9-4-518(f). The presiding officer shall announce to those in attendance that the Board, due to the confidential nature of material to be discussed, will meet in executive session which is closed to the public. The presiding officer shall set and announce a time specific at which point the meeting will again be opened for public attendance. The Board shall not take any official action during executive sessions. Minutes of executive sessions shall be maintained in such a manner as to not disclose the nature of confidential information discussed.

(3) Records.

(a) Where Maintained. All records of the Board shall be maintained by the State Treasurer in accordance with the requirements of applicable state law and rules and regulations pertaining to the receipt and maintenance of public records.

(b) Confidential Records. Records submitted from any source which are confidential in nature as provided in T.C.A. § 9-4-518(e) shall be maintained by the State Treasurer in such a manner as to protect the confidentiality of those records and to prevent the unauthorized dissemination of such information.

(c) Access to Records. Persons requesting access to the records of the Board shall submit their request to the State Treasurer who, upon determining that such records are not confidential in nature, shall permit the inspection of such records in accordance with applicable law, rules and regulations.

(4) General Delegation to Treasurer. The Board, upon the affirmative vote of seven (7) members, may delegate such of its duties to the State Treasurer as the Board deems appropriate. In exercising such delegations, the State Treasurer shall be authorized to exercise such powers as are vested in the Board which are necessary to fulfill the delegated duties and responsibilities, and may assign any such duties and responsibilities to his staff as he deems necessary and proper.

(5) Votes Required for Board Action.

(a) Admission. Pursuant to T.C.A. § 9-4-503(b), no bank nor savings institution shall be admitted for participation in the Collateral Pool unless it receives six (6) affirmative votes of the Board.

(b) Increase Collateral Pledge Level. The collateral pledge level of a qualified public depository may be increased upon four (4) affirmative votes of the Board.

(c) Suspension from Collateral Pool. A qualified public depository may be suspended from participation in the collateral pool upon four (4) affirmative votes of the Board.

(d) Mandatory Withdrawal. Pursuant to T.C.A. § 9-4-517(a), a qualified public depository shall be required to withdraw upon a majority vote of the Board. For purposes of this

rule, a majority vote shall mean an affirmative vote of four (4) members of the Board.

(e) Benchmark Levels. The Board, upon the affirmative vote of four (4) members, shall set the benchmark levels in accordance with rule 1700-04-01-.03(2)(b) and (c). Any subsequent revision to the established benchmark levels may be accomplished by a majority vote of the Board, unless the revision causes the benchmark levels to be less stringent upon applicants. Should the Board’s subsequent revision cause the benchmark levels to be less stringent upon applicants, then the revision shall require six (6) affirmative votes of the Board. The benchmark levels shall be included in the Collateral Pool Operations Manual and made available to prospective applicants for admission to the collateral pool.

(f) Majority Vote for Other Actions. Any action of the Board, other than that requiring a specific affirmative vote, may be accomplished by a majority vote. For purposes of this

rule, a majority shall mean the affirmative vote of four (4) members of the Board.

(6) Board Officers.

(a) Selection. Officers shall be elected by majority vote of the Board. The election of officers shall occur at the first Board meeting held after June 30 of each year.

(b) Term. Officers shall serve a one (1) year term to expire upon election of a successor by the Board.

(c) Chairman. The Chairman shall preside at meetings of the Board and, together with the Board Secretary, set the agenda for each meeting. The Chairman shall have other duties and powers as may be assigned by the Board by majority vote.

(d) Vice-Chairman. The Vice-Chairman shall preside at meetings in the absence of the Chairman. The Vice-Chairman shall exercise such other duties as may be assigned by majority vote of the Board.

(e) Secretary. The Secretary shall keep an accurate record of the proceedings and actions of the Board. Together with the Chairman, the Secretary shall set the agenda for each meeting, notify Board members and the public of meetings and distribute appropriate materials to Board members. The Secretary shall also maintain information on the appointment of members to the Board and their term of office.

(7) Miscellaneous.

(a) Attachment to Treasury Department. The Board, for administrative purposes, is attached to the Tennessee Treasury Department pursuant to T.C.A. § 9-4-506(e).

(b) Vacancies. Should any appointed member of the Board become unable to continue to serve on the Board for whatever reason, the member or his representative shall notify the Board of such inability to serve by submitting a letter of resignation to the Secretary. The Secretary shall notify the appropriate appointing Authority of the resignation and request that another representative be appointed to serve the remainder of the member’s term.

History

Authority: T.C.A. §§ 9-4-503, 9-4-506, 9-4-508, and 9-4-521(c).
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed January 30, 1995; effective May 31, 1995. Amendment filed August 30, 1996; effective December 27, 1996. Amendment filed October 29, 1999; effective February 28, 2000. Amendments filed June 23, 2015; effective September 21, 2015. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.03 ADMISSION TO COLLATERAL POOL

(1) Application by Public Depository.

(a) Applications for Participation. To be considered for admission to the collateral pool, a Tennessee bank, as defined in T.C.A. § 45-12-102, or a Tennessee savings institution, as defined below, shall submit a completed Application Package to the Board. The Application Package shall include a completed application form and required supplemental information and documents. For purposes of these rules, a “Tennessee savings institution” means any savings association as defined in 12 U.S.C. § 1813 and which has branches located in the State of Tennessee authorized to accept federally insured deposits.

(b) Application Form. The State Treasurer shall prescribe an appropriate form which solicits from applicants the following information:

The legal name of the financial institution;
The address of principal offices of the institution;
The institution’s transit routing number;
The institution’s FDIC insurance certificate number;
The institution’s tax identification number;
The date the institution was chartered;
The date the institution commenced operations in Tennessee;
A list of the applicants three (3) senior officers, including a resume of their experience and qualifications;
A list of public depositors by account held by the applicant at the end of the preceding calendar year;
For the twelve (12) months preceding the date of application, the average monthly balance of public deposits held for each month;
The legal name and address of the principal offices of all trustee custodians proposed to safekeep eligible collateral pledged to the pool;
For the eight (8) quarters immediately preceding the date of application, a schedule of financial information, as determined by the Board, to be taken from the institution’s Report of Condition to the FDIC or from the institution’s Thrift Financial Report to the OTS (collectively referred to as call report).

(c) Supplemental Information and Documents Required. The Application Package shall include the following executed documents:

Copies of the Depository Pledge Agreement; and 2. Copies of the Contingent Liability Agreement.

(d) Completion of Application Form. The application form shall be executed by the president or chief executive officer of the applicant and the individual responsible for preparing the application and contain all the prescribed information to be considered complete. The applicant may withdraw the application at any time prior to the Board taking final action on the application.

(2) Admission Criteria.

(a) Admission Criteria. In order to be admitted to the collateral pool, each applicant must meet or exceed the standards established by the Board, which include, but are not limited to benchmark levels and financial standards.

(b) Benchmark Levels. Any applicant requesting participation in the collateral pool shall meet the benchmark levels established by the Board to determine an applicant’s eligibility to participate in the collateral pool. In addition to the benchmark levels established by the Board pursuant to this Paragraph, the Board may consider, in its sole discretion, any private source of information that is available to the Board at the time that it considers the applicant’s participation in the collateral pool to evaluate the applicant’s performance.

(c) Evaluation of Financial Ratios. The Board may consider any one, all, or any combination of the benchmarks established by the Board which are derived from and calculated by using the following ratios taken from the schedule submitted by the applicant pursuant to rule 1700-04-01-.03(1)(b)12. The ratios will be analyzed against the benchmarks:

Capital Adequacy Ratios:

(i) Primary Capital to Assets.

Total Equity Capital Total Assets (ii) Total Capital to Assets.

Subordinated Notes & Debentures Limited Life Preferred Stock Total Equity Capital Total Assets (iii) (I) For banks, Regulatory (Tier 1) Capital Calculated in accordance with 12 CFR Part 225; 12 CFR Part 208; or 12 CFR 325, as applicable to the applicant.

(II) For savings institutions, Core (Tier 1) Capital Calculated in accordance with 12 CFR Part 567.5(a), as applicable to the applicant.

(III) For public depositors adopting the Community Bank Leverage Ratio Framework, Leverage Ratio (Tier 1) Capital Calculated in accordance with 12 CFR Part 3; 12 CFR Part 217; and 12 CFR Part 324.

(iv) (I) For banks, Regulatory (Tier II) Capital Calculated in accordance with 12 CFR Part 225; 12 CFR Part 208; or 12 CFR Part 352, as applicable to the applicant.

(II) For savings institutions, Supplemental (Tier II) Capital Calculated in accordance with 12 CFR Part 567(b), as applicable to the applicant. Savings institutions must pass the three (3) risk-based capital requirements set forth in 12 CFR 567.2(a)(1).

(III) For public depositors adopting the Community Bank Leverage Ratio Framework the Tier II capital ratio will not be considered for admission or collateral pledge levels.

Asset Quality Ratios:

(i) Loan Loss Allowance to Non-Performing Loans.

Allowance for Loan Losses Total Loans Past Due 90 Days Total Non-Accrual Loans (ii) Loans 90 Plus Days to Total Loans.

Total Non-Accrual Assets Total Loans Past Due 90 Days Total Loans (iii) Non-Performing Assets to Total Assets.

Total Loans Past Due 90 Days Total Non-Accrual Loans Other Real Estate Owned Total Assets 3. Earnings Ratio:

Return on Average Assets (Annualized)

Net Income (Annualized)

Average Assets 4. Liquidity Ratio:

Loans to Total Assets Total Loans Total Assets (d) Evaluation of Other Factors. The Board may further consider such other information bearing on the applicant’s appropriateness for participation in the pool as in the opinion of the Board may be relevant including, but not limited to, the applicant’s mode of conducting and managing its affairs, the action of its directors, the investment of the applicant’s funds, the safety and prudence of the applicant’s management, and any administrative proceeding or court action initiated against the applicant.

(3) Consideration of Application.

(a) Consideration by the State Treasurer. Upon receipt of an Application Package, the State Treasurer shall review the contents of the Application Package to ensure completeness. In the event that an Application package is found to be incomplete, the State Treasurer shall notify the applicant of the deficiency and provide the applicant with sixty (60) calendar days in which to cure the deficiency. If the deficiency is not cured within this time, the State Treasurer shall return the Application Package to the applicant. Upon determining that an Application Package is complete, the State Treasurer shall notify the Chairman that applications are ready for consideration by the Board.

(b) Consideration by the Board. The Board shall consider each completed application submitted by an applicant for participation in the collateral pool. The Board, upon majority vote, may delay action upon any application until the next succeeding meeting of the Board. Provided, however, the Board may not delay action on any application more than one (1) time. An applicant receiving the requisite number of votes for admission shall be admitted to the pool.

(c) Notice to Applicant. The Secretary of the Board shall notify an applicant in writing of any action taken by the Board or by the Treasurer within ten (10) calendar days of such action.

(4) Appeal of Admission Determination. Any applicant denied admission to the collateral pool may make a written request for reconsideration to the Board by following the appeal procedure in rule 1700-04-01-.13.

History

Authority: T.C.A. §§ 9-4-503 and 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed January 30, 1995; effective May 31, 1995. Amendment filed August 30, 1996; effective December 27, 1996. Amendments filed June 23, 2015; effective September 21, 2015. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.04 DETERMINATION OF COLLATERAL PLEDGE LEVEL

(1) Collateral Pledge Level. A qualified public depository shall pledge eligible collateral having a market value of not less than the greater of the average daily balance or average monthly balance of public deposits held by the qualified public depository multiplied by the qualified public depository’s collateral pledging level. The collateral pledging level for all qualified public depositories shall be calculated quarterly according to the following schedule:

(a) The collateral pledge level shall equal one hundred percent (100%) for the following: public depositories meeting seven (7) out of the nine (9) benchmarks and three (3) out of the four (4) capital ratios pursuant to rule 1700-04-01-.03(2)(b) and (c); and public depositories electing to use the Community Bank Leverage Ratio Framework contained in 12 CFR Part 3, 12 CFR Part 217, 12 CFR Part 324 meeting six (6) out of the eight (8) benchmarks and two (2) out of the three (3) capital ratios pursuant to rule 1700-04- 01-.03(2)(b) and (c).

(b) The collateral pledge level shall equal one hundred fifteen percent (115%) for the following: public depositories meeting fewer than seven (7) out of the nine (9) benchmarks or fewer than three (3) out of the four (4) capital ratios pursuant to rule 1700-04-01-.03(2)(b) and (c); and public depositories electing to use the Community Bank Leverage Ratio Framework contained in 12 CFR Part 3, 12 CFR Part 217, 12 CFR Part 324 meeting fewer than six (6) out of the eight (8) benchmarks or fewer than two (2) out of the three (3) capital ratios pursuant to rule 1700-04-01-.03(2)(b) and (c).

chapter. The benchmarks established by the Board for collateral pool admission may differ from the benchmark levels established by the Board for evaluating collateral pool pledge levels. The financial information necessary in determining whether the benchmark levels have been met by a qualified public depository for a given quarter shall be taken from the quarterly report provided to the board from the public depository or any other source the State Treasurer deems reliable.

(2) Minimum Pledged Collateral. Notwithstanding the average daily balance or average monthly balance, qualified public depository shall maintain a minimum of pledged eligible collateral whose market value is not less than one hundred thousand dollars ($100,000.00).

(3) Temporary Increases in Collateral. A qualified public depository which accepts any public deposit that causes its public deposits to exceed the greater of its average daily balance, or average monthly balance by twenty-five percent (25%) shall be required to pledge additional eligible collateral with the Treasurer within two (2) business days of the deposit. The additional eligible collateral shall be equal to the difference between the actual public deposits and the greater of the average daily balance or average monthly balance times the applicable collateral pledge level. The additional eligible collateral shall not be required if deposits causing the increase are withdrawn within the two (2) business days and prior to pledging of the additional collateral. Additional pledged collateral shall be included in required collateral and held by the Treasurer until the next regular monthly report is filed.

History

Authority: T.C.A. §§ 9-4-503, 9-4-504, 9-4-508, 9-4-508(1)(D), and 9-4-508(7).
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed August 30, 1996; effective December 27, 1996. Amendment filed October 29, 1999; effective February 28, 2000. Amendment filed May 31, 2000; effective September 28, 2000. Amendment filed October 30, 2001; effective February 28, 2002. Amendments filed June 23, 2015; effective September 21, 2015. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.05 ENFORCEMENT ACTIONS - CEASE AND DESIST ORDERS

(1) Cease and Desist Orders. If the Board has reason to believe that any qualified public depository or other financial institution subject to the regulatory Authority of the Board is or has been violating any of the provisions of the Act or of these rules including, but not limited to, any action that would constitute a default under the Act, or any failure to meet the criteria set forth in rule 1700-04-01-.03(2), or any failure to file any required report or perform any required action, the Board may issue to the qualified public depository or other financial institution that is subject to the Authority of the Board an order to cease and desist from the violation or to correct the condition giving rise to or resulting from the violation.

(2) Notice to Qualified Public Depository. The qualified public depository shall be notified within five (5) business days of the cease and desist order. The cease and desist order shall specify the violation, the effective date of the cease and desist order, and the terms and conditions of such cease and desist order.

(3) Effect of Cease and Desist Order. A cease and desist order may contain any terms and conditions the Board may deem necessary or appropriate to remedy any violation of law or these rules. Such terms and conditions may include, but shall not be limited to, enhanced reporting requirements or pledging of additional collateral.

(4) Appeal. A qualified public depository which is issued a cease and desist order may appeal the decision by following the appeal procedure in rule 1700-04-01-.13.

History

Authority: T.C.A. § 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992.

Tenn. Comp. R. & Regs. 1700-04-01-.06 SUSPENSION FROM POOL

(1) Notice of Suspension to Qualified Public Depository. The Board may suspend or disqualify any qualified public depository for a violation of any order issued pursuant to these rules or for violation of any of the provision of the Act or these rules. The qualified public depository shall be notified of the effective date of the suspension, the length of the suspension and such terms or conditions of the suspension that the Board may prescribe within ten (10) business days of the action by the Board.

(2) Notice of Suspension to Public Depositors. The qualified public depository shall furnish the Treasurer, in a form prescribed by him, a current listing of all public depositors within five (5) business days of the receipt of a notice of suspension. The Treasurer shall notify each public depositor appearing on the listing submitted by the qualified public depository of the effective date, duration and terms of suspension of any qualified public depository. In addition, if the suspension is for longer than sixty (60) calendar days, the Treasurer shall publish the notice of suspension in the Tennessee Administrative Register.

(3) Effect of Suspension. A qualified public depository which is suspended from participation in the pool shall be prohibited from opening additional demand deposit accounts, accepting any savings deposits or time deposits which would be secured by the pool or from renewing any time deposits which are secured by the pool. The qualified public depository shall continue to file all required reports and shall continue to collateralize all existing time deposits, savings deposits and demand deposits secured by the pool.

(4) Appeal. A qualified public depository which is suspended may appeal the decision by following the appeal procedure in rule 1700-04-01-.13.

History

Authority: T.C.A. § 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992.

Tenn. Comp. R. & Regs. 1700-04-01-.07 REPORTING BY QUALIFIED PUBLIC DEPOSITORY

(1) Monthly Reports.

(a) Report Contents. A qualified public depository shall submit a monthly report to the Treasurer containing information required by the Board and prescribed by the Treasurer. The report shall include, but shall not be limited to, the following: average daily balance of all demand deposits; the average daily balance of all time deposits and the average daily balance of all savings deposits held by it during the month; the average monthly balance of all public deposits held for the previous twelve (12) calendar months; a detailed schedule of all securities pledged as collateral; a statement of selected financial information; and such other information requested on the form.

(b) When Due. The monthly report shall be delivered to the Treasurer not later than the fifteenth (15th) day after the end of each calendar month, or when requested by the Treasurer, and shall contain the applicable information for the preceding calendar month. The report shall be submitted under oath, and signed by the president or other duly authorized officer of the institution, and by the individual who prepared the report.

(c) Supplemental Report. At any time, the Board or the Treasurer may, in writing, request any information which would be included in the monthly report. The qualified public depository shall provide the supplemental report to the Treasurer within five (5) business days of receipt of the request.

(d) Amended Reports. At any time that a qualified public depository determines that any information contained on a monthly report is inaccurate or incomplete, the qualified public depository shall file an amended report with the Treasurer not later than ten (10) business days after the determination is made.

(2) Quarterly Reports. The Treasurer shall obtain on a quarterly basis, from whatever source the Treasurer deems reliable, a statement of selected financial information from the quarterly call report required to be filed by qualified public depositories under the Federal Deposit Insurance Act, 12 U.S.C. Section 1817 et seq. Upon written notice to all qualified public depositories, the Treasurer may require the qualified public depositories to file such report directly with the Treasurer.

(3) Annual Reports.

(a) Annual Reports Generally. Every qualified public depository shall file an annual report with the Treasurer. The annual report shall be filed on a form approved by the Board and shall contain a statement of all public deposits held for the credit of all public depositors at the close of business on the last business day in the calendar year. The statement shall be prepared by a person qualified to conduct audits. The annual report shall contain such other information approved by the Board on a form prescribed by the Treasurer.

(b) When Due. The annual report shall be filed not later than March 31 of each year and shall include the required information for the prior calendar year.

(c) Amended Report. Every qualified public depository shall file with the Treasurer an amended annual report if it determines that any information included on the annual report is inaccurate or incomplete. The amended report shall be filed within fifteen (15) business days of the time the qualified public depository determines that the prior report was inaccurate or incomplete.

(4) Change of Name, Address, Charter of the Institution, or Ownership.

(a) Report Contents. Every qualified public depository shall file with the Treasurer, on a form prescribed by him, a report of any change of name, address, charter or ownership of the institution.

(b) When Due. The report shall be filed within three (3) business days of such change.

(5) Confidential Information. It shall be the responsibility of each qualified public depository from which information or reports is required to inform the Treasurer of information that is confidential. The Treasurer shall design report forms so that any information which is confidential may be placed on separate sheets; only information which is confidential by State or Federal law may be so designated.

History

Authority: T. C.A. §§ 9-4-508 and 9-4-518.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed August 30, 1996; effective December 27, 1996. Amendment filed October 30, 2001; effective February 28, 2002. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.08 TRUSTEE CUSTODIANS

(1) Appointment of Trustee Custodians. Upon being designated as a qualified public depository, the qualified public depository shall appoint one (1) or more trustee custodians from the deposit of eligible collateral by the qualified public depository. The appointment shall be made on a form provided by the Treasurer and shall be delivered to and accepted by the Treasurer prior to the deposit of any collateral with the trustee custodian.

(2) Notification. The Treasurer shall notify the qualified public depository of the acceptance or denial of any appointment of a trustee custodian.

(3) Report Contents. Every trustee custodian shall submit a monthly report to the Treasurer providing a description of eligible collateral securities deposited by the qualified public depository, including the par value of the eligible collateral, as well as other information requested by the Treasurer.

(4) When Due. The trustee custodian shall file the report with the Treasurer on a schedule as established by the Treasurer. The report shall include information as of the end of the scheduled month.

(5) Amended Reports. A trustee custodian shall submit to the Treasurer an amended report at any time that it determines the information on any prior report was incomplete or inaccurate.

The amended report shall be filed not later than ten (10) business days after it determines that any prior report was inaccurate or incomplete.

History

Authority: T.C.A. §§ 9-4-505 and 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.09 REPEALED

History

Authority: T.C.A. § 9-4-503 and 9-4-508.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed August 30, 1996; effective December 27, 1996. Repeal filed June 23, 2015; effective September 21, 2015.

Tenn. Comp. R. & Regs. 1700-04-01-.10 WITHDRAWAL FROM COLLATERAL POOL PARTICIPATION

(1) Voluntary Withdrawal.

(a) Voluntary Withdrawal Generally. A qualified public depository may withdraw from participation in the collateral pool by giving written notice to the State Treasurer, and to all public depositors having deposits at the qualified public depository. The notice shall provide an effective date of withdrawal which shall not be less than one hundred eighty (180) calendar days after the date the notice is received by the Treasurer.

(b) Contingent Liability of Withdrawing Qualified Public Depository. A qualified public depository shall be contingently liable for any loss to the pool as provided in the contingent liability agreement. To assure that an institution can meet its contingent liability, an institution shall continue to maintain pledged collateral in an amount established by the Board.

(c) Reports. The withdrawing qualified public depository shall continue to file monthly and annual reports with the Treasurer during the period in which the contingent liability agreement is in effect. To the extent that the Treasurer requires qualified public depositories to submit quarterly reports directly to the Treasurer pursuant to this

chapter, this requirement shall continue to be in effect during the period in which the contingent liability agreement is in effect.

(2) Mandatory Withdrawal from Collateral Pool.

(a) Mandatory Withdrawal Generally. A qualified public depository shall be required to withdraw upon the vote of a majority of the Board as provided in T.C.A. § 9-4-517.

(c) Reports. The withdrawing qualified public depository shall continue to file monthly and annual reports with the Treasurer during the period in which the contingent liability agreement is in effect as well as the quarterly reports required under rule 1700-04-01- .07 unless the quarterly reports are suspended pursuant to subparagraph (2)(c) thereof.

(3) Appeal. Any qualified public depository subject to mandatory withdrawal may appeal the decision of the Board by following the appeal procedure in rule 1700-04-01-.13.

History

Authority: T.C.A. §§ 9-4-508, 9-4-516, and 9-4-517.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendment filed October 30, 2001; effective February 28, 2002. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.11 PUBLIC DEPOSITOR ACCOUNTS

A public depositor shall ensure that the name of the public depositor is on the account title or certificate of deposit provided to the public depositor by the qualified public depository in a manner sufficient to disclose the identity of the public depositor.

History

Authority: T.C.A. §§ 9-4-508 and 9-4-519.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992. Amendments filed August 19, 2021; effective November 17, 2021.

Tenn. Comp. R. & Regs. 1700-04-01-.12 PAYMENT OF LOSSES

(1) Priority for Multiple Losses. In the event a default or insolvency occurs to more than one qualified public depository, claims of public depositors shall have priority based on the date of the default or insolvency. Claims arising from a default or insolvency occurring earliest in time shall have priority over claims arising subsequently.

(2) Payment. The Treasurer shall establish the priority of claims arising from multiple defaults or insolvencies and pay public depositors based on the priority established.

History

Authority: T.C.A. §§ 9-4-508 and 9-4-512.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992.

Tenn. Comp. R. & Regs. 1700-04-01-.13 APPEAL OF DECISIONS

(1) Admission and Collateral Pledge Level Determinations. An applicant or qualified public depository may appeal any final decision of the Board regarding its application for admission or collateral pledge level determination by filing written notice of appeal with the State Treasurer not later than thirty (30) calendar days after the final decision. An appeal of the Board decision shall be considered a contested case and shall follow the procedures for contested cases in T.C.A., Title 4, Chapter 5, Part 3.

(2) Cease and Desist, Suspensions and Withdrawal Determinations. Prior to the issuance of a cease and desist, suspension or mandatory withdrawal order, the Board shall advise the public depository of the facts which warrant the intended action and of the depository’s right to request, within thirty (30) calendar days of receipt of such advice, a contested case hearing to show why the intended action is not warranted. Provided, however, the Board may, prior to affording an opportunity for such hearing, issue a cease and desist order, suspend or require mandatory withdrawal of a public depository if the Board finds that the safety of public deposits imperatively requires such action and incorporates a finding to that effect in its order.

History

Authority: T.C.A. §§ 9-4-508 and 9-4-509.
Administrative History: Original rule filed April 30, 1992; effective July 30, 1992.

Chapter 1700-05-01 Repealed

Tenn. Comp. R. & Regs. 1700-05-01-.01 REPEALED

History

Authority: T.C.A. §§ 49-7-801; 49-7-802; 49-7-802(1), (3) through (8), (10) through (12), and (14); 49-7- 803; 49-7-805; 49-7-805(8), (13), (14), and (16); 49-7-807; 49-7-807(b); 49-7-808; 49-7-809; 49-7- 809(a)(2), (a)(3), (a)(5), and (a)(10); 49-7-811; 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed March 6, 1998; effective July 29, 1998. Amendment filed May 29, 1998; effective September 28, 1998. Amendment filed July 31, 1998; effective November 28, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Emergency rules filed December 29, 2011; effective through June 26, 2012. Amendments filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.18 REPEALED

History

Authority: T.C.A. §§ 49-7-802(6); 49-7-805(14) and (16); 49-7-809(a)(8); 49-7-823; and 49-7-824.
Administrative History: Original rule filed February 28, 2002; effective June 28, 2002. Emergency rule filed December 29, 2011; effective through June 26, 2012. Amendment filed December 29, 2011; effective May 30, 2012. Amendment filed December 29, 2012; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.02 REPEALED

History

Authority: T.C.A. §§ 4-3-2401; 49-7-804; 49-7-804(a), (e), and (g); 49-7-805(4), (16), and (17); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed May 29, 1998; effective September 28, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.03 REPEALED

History

Authority: T.C.A. §§ 49-7-802(1), (4) and (11); 49-7-804(g); 49-7-805(8), (10), (15), (16), and (17); 49-7- 806; 49-7-807; 49-7-807(c); 49-7-809; 49-7-809(1); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed March 6, 1998; effective July 29, 1998. Amendment filed May 29, 1998; effective September 28, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendment filed December 30, 2004; effective April 29, 2005. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.04 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16); 49-7-812(b); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed July 31, 1998; effective November 28, 1998. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.05 REPEALED

History

Authority: T.C.A. §§ 49-7-802; 49-7-805(11), (12), (14), (15), and (16); 49-7-806; 49-7-807; 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed March 6, 1998; effective July 29, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendment filed March 31, 2004; effective July 29, 2004. Emergency rule filed December 29, 2011; effective through June 26, 2012. Amendment filed December 29, 2011; effective May 30, 2012. Amendment filed October 20, 2015; effective January 18, 2016. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.06 REPEALED

History

Authority: T.C.A. §§ 49-7-802(9); 49-7-805(15) and (16); 49-7-807; 49-7-809; 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed May 29, 1998; effective September 28, 1998. Amendment filed July 31, 1998; effective November 28, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.07 REPEALED

History

Authority: T.C.A. §§ 49-7-802(9); 49-7-805(10), (14), and (16); 49-7-807; 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed August 31, 1999; effective December 29, 1999. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.08 REPEALED

History

Authority: T.C.A. §§ 49-7-805(8), (10), and (13) through (16); 49-7-809(a)(2) and (a)(8); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed March 6, 1998; effective July 29, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.09 REPEALED

History

Authority: T.C.A. §§ 49-7-802(9); 49-7-805(14) and (16); 49-7-809(a)(8) and (d); 49-7-811(d); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed May 29, 1998; effective September 28, 1998. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.10 REPEALED

History

Authority: T.C.A. §§ 49-7-802(9); 49-7-805(10), (14), and (16); 49-7-811; 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.11 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.12 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed August 31, 1999; effective December 29, 1999. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.13 REPEALED

History

Authority: T.C.A. §§ 49-7-805(10) and (16); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Amendment filed August 31, 1999; effective December 29, 1999. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.14 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.15 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.16 REPEALED

History

Authority: T.C.A. §§ 49-7-805(16); 49-7-823; and 49-7-824.
Administrative History: Original rule filed October 30, 1996; effective February 28, 1997. Repeal filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-01-.17 REPEALED

History

Authority: T.C.A. §§ 49-7-802(9); 49-7-805(14) and (16); 49-7-809(b); 49-7-823; and 49-7-824.
Administrative History: Original rule filed August 31, 1999; effective December 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendments filed March 5, 2018; effective June 3, 2018. Repeal filed November 15, 2022; effective February 13, 2023.

Chapter 1700-05-02 Repealed

Tenn. Comp. R. & Regs. 1700-05-02-.01 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.02 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.03 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed December 30, 2004; effective April 29, 2005. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.04 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.05 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Amendment filed March 31, 2004; effective July 29, 2004. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.06 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.07 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.08 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.09 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.10 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.11 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.12 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Amendment filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.13 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823 and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.14 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.15 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.16 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.17 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed July 30, 1999; effective November 29, 1999. Repeal filed April 11, 2008; effective August 28, 2008.

Tenn. Comp. R. & Regs. 1700-05-02-.18 REPEALED

History

Authority: T.C.A. §§49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Original rule filed February 28, 2002; effective June 28, 2002. Repeal filed April 11, 2008; effective August 28, 2008.

Chapter 1700-05-03 College Savings Incentive Plan

Tenn. Comp. R. & Regs. 1700-05-03-.01 IN GENERAL

(1) Purpose. The purpose of these rules is to establish and implement the college savings incentive plan or plans for the benefit of low-income individuals using funds from the Small and Minority-Owned Business Assistance Program pursuant to Chapter 359 of the 2013 Public Acts. The public act authorizes the Board of Trustees of the College Savings Trust Fund Program to promulgate rules relative to the implementation and administration of incentive plan or plans.

(2) Definitions. For purposes of these rules:

(a) “Academic term” means the school segment consisting of a single semester, quarter, term or equivalent.

(b) “Account” means the record that contains the amount of contributions, other than Matching contributions, deposited and maintained by the Purchaser on behalf of a Beneficiary under a Contract, plus the earnings or losses incurred thereon, including any Withdrawals made from the Account.

(c) “Beneficiary” means an individual designated under a Contract as the individual entitled to apply contributions and earnings accrued under the Contract as well as Matching contributions to the payment of that individual’s undergraduate, graduate and professional Qualified higher education expenses as defined in this chapter.

(d) “Board” has the same meaning as given in T.C.A. § 49-7-802(2).

(e) “Contract” means an Educational savings plan tuition contract entered into pursuant to T.C.A. § 49-7-808 by the Board and a Purchaser with an Eligible college savings program to provide for the payment of Qualified higher education expenses as defined in this chapter.

(f) “Educational savings plan” means a plan which permits individuals, associations, contributions and trusts to make contributions to an account that is established by a Purchaser for a designated Beneficiary.

(g) “Eligible college savings program” means any college savings program established pursuant to § 529 of the Internal Revenue Code with which the Board has contracted to provide similar benefits for Tennessee residents, or any § 529 college savings program established by the State of Tennessee.

(h) “Eligible educational institution” means an institution of postsecondary education as defined in § 529 of the Internal Revenue Code.

(i) “Fiscal year” means the period beginning on July 1 of each year and ending on June 30 of the next following year.

(j) “Household” means a group of individuals who are related by birth, marriage, or adoption and who share a residence.

(k) “Legally incompetent” means that an individual has been declared incompetent by a court of law. An individual shall not be considered to be Legally incompetent unless proof thereof is furnished in such form and manner as the Board may require.

(l) “Matching contribution” means the amount that is deposited by the Board into the Matching contribution account for each Beneficiary after all eligibility requirements for participation in the Matching grant incentive program have been satisfied pursuant to

Rule 1700-05-03-.02.

(m) “Matching contribution account” means the record that contains the Matching contributions deposited and maintained by the Board in a Beneficiary’s Account, plus the earnings or losses incurred thereon, including any Withdrawals made from the Matching contribution account, subject to the restrictions on the use of funds in the Matching contribution account contained in these rules.

(n) “Matching grant incentive program” means the educational incentive program established pursuant to T.C.A. § 49-7-808(d) in which matching funds are contributed by the Board to Purchasers on behalf of Beneficiaries based on income levels for the Purchaser’s Household and the amount of the Purchaser’s contributions for the payment of the Beneficiary’s Qualified higher education expenses.

(o) “Member of the family” means the mother, father or ancestor of either, stepmother, stepfather, siblings of either the mother or father of the Beneficiary, or such other person as may be defined as a “Member of the family” of the Beneficiary under the sections of the Internal Revenue Code that are applicable to the eligible college savings program.

(p) “Minimum contribution” means the amount that must have been contributed to the Account of a Beneficiary during the Qualifying period as determined pursuant to Rule

Tenn. Comp. R. & Regs. 1700-05-03-.02 ELIGIBILITY REQUIREMENTS

(1) The Purchaser must file an application for the Matching contribution in accordance with Rule

Tenn. Comp. R. & Regs. 1700-05-03-.03 APPLICATION FOR MATCHING CONTRIBUTION

(1) A Purchaser must file an application for the Matching contribution on a form as prescribed by the Board. The application must include the following information:

(a) The name and address of the Beneficiary;

(b) The name and address of the Purchaser;

(d) The sex and date of birth of the Beneficiary;

(e) The Purchaser’s Household income;

(f) Authorization from the Purchaser for the Board to verify with the Eligible college savings program that all the requirements set forth in these rules have been met for purposes of qualifying for the Matching contribution; and (g) Such other information as the Board may require.

(2) The application must be filed with the Board during the applicable Qualifying period and will be processed on a first come, first serve basis based on the amount of funds appropriated by the General Assembly.

(3) In addition to the application requirements contained in paragraphs (1) and (2) of this rule, a Purchaser who is applying to participate in the Matching grant incentive program to receive the Matching contribution shall authorize the Board to obtain and confirm certain income eligibility data and provide the Board with either of the following for the period of time annually determined by the Board, not to exceed the five (5) years immediately preceding the Qualifying period:

(a) A copy of the federal income tax returns for the Purchaser and for each individual residing in the Purchaser’s Household who is required to file an income tax return; or (b) Information that would allow the Board to verify that the Purchaser is receiving or has received benefits through one (1) or more of the following programs, including, but not limited to:

Temporary Assistance for Needy Families (TANF);
State Medicaid;
Supplemental Nutrition Assistance Program (SNAP); or 4. Any such similar program or programs approved by the Board demonstrating that the Purchaser meets the income limits and standards established by the Board.

Authorizations executed by the Purchaser and the members of the Purchaser’s Household allowing the Board to verify the federal adjusted gross income for the Purchaser and all individuals residing in that Household; and 2. Any such other documentation requested by the Board.

(4) Subsequent to a Purchaser’s initial application to participate in the Matching grant incentive program, and for each subsequent Qualifying period, the Purchaser shall reapply to participate in the Matching grant incentive program by submitting an application and providing the information requested in paragraph (3) of this rule to the Board to ensure the Purchaser’s continued eligibility to participate in this program. In the event that the Purchaser becomes ineligible to continue participating in the Matching grant incentive program and to continue receiving the Matching contribution for any Beneficiary accounts, the Purchaser shall be able to continue making contributions to the Purchaser’s § 529 college savings account but will not receive the Matching contribution for that year or any other subsequent year that the Purchaser does not qualify.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-805(4), 49-7- 805(16), 49-7-808(d), 65-5-113, and 65-5-113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Amendments filed April 11, 2014; effective September 28, 2014. Amendments filed February 13, 2025; effective May 14, 2025.

Tenn. Comp. R. & Regs. 1700-05-03-.04 REJECTION OF APPLICATION OR FORFEITURE OF MATCHING CONTRIBUTION

(1) Rejection of Application. An application for a Matching contribution will be rejected by the Board if any of the following occurs:

(a) The Purchaser fails to provide all the information required in Rule 1700-05-03-.03;

(b) The Purchaser fails to meet the eligibility requirements to participate in the Matching grant incentive program as provided in Rule 1700-05-03-.02;

(c) The Purchaser makes a misrepresentation in the application for the Matching contributions; or (d) The requisite Minimum contribution was not made to the Account during the Qualifying period.

(2) Forfeiture of Matching Contribution. If, at any time, the Board determines that a Purchaser made a misrepresentation in an application for a Matching contribution that resulted in a Matching contribution being made to an Account, the Matching contribution will be forfeited and returned to the Board.

(3) Applications Made in Subsequent Qualifying Periods. Rejection of an application for a Matching contribution shall not preclude the Purchaser from reapplying for a Matching contribution in subsequent Qualifying periods, provided the Purchaser completes a new application and files the same with the Board during the applicable Qualifying period.

Notwithstanding this Rule, the Board may, at its discretion, reject any application made by a Purchaser who was found to have made a misrepresentation on an application submitted by the Purchaser in a previous year.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-805(4), 49-7- 805(16), 49-7-808(d), and 65-5-113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Amendment filed April 11, 2014; effective September 28, 2014.

Tenn. Comp. R. & Regs. 1700-05-03-.05 INELIGIBLE INDIVIDUALS

(1) For the first fiscal year that the Matching grant incentive program is in operation, the following individuals shall not be eligible to receive Matching contributions as either a Purchaser or a Beneficiary: Tennessee Department of Treasury employees; members of the Board, or an immediate family member of any of the foregoing. For purposes of this rule, an “immediate family member” means a parent, spouse, sibling, child, stepchild or grandchild. For each subsequent fiscal year, the Board shall determine whether the total amount of money available for the fiscal year will be sufficient to allow the individuals listed in this rule to receive a Matching contribution.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-808(d), and 65-5- 113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Repeal and new rule filed April 11, 2014; effective September 28, 2014.

Tenn. Comp. R. & Regs. 1700-05-03-.06 PURCHASERS AND BENEFICIARIES

(1) A Purchaser may only have one (1) Beneficiary on each Account.

(2) A Purchaser may not have more than one (1) Account in the same Beneficiary’s name.

(3) A Beneficiary who has been designated as a Beneficiary on more than one (1) Account by two (2) or more different Purchasers shall only be eligible for one (1) Matching Contribution during each Qualifying period and shall not be eligible to receive another Beneficiary’s Matching contributions through a change in Beneficiary.

(4) A Purchaser may change a Beneficiary on an Account in accordance with the requirements contained in Tenn. Comp. R & Regs. 1700-05-04-.05(2) and (4). A Purchaser may request a one-time change of the Beneficiary on the Matching contribution account to a new Beneficiary meeting the residency, age, and familial requirements contained in Rule 1700-05- 03-.02, unless the new Beneficiary already has an existing Matching contribution account. A Purchaser may change the Beneficiary on a Matching contribution account by submitting a request for a change to the Board on a form prescribed by the Board. The new Beneficiary on a Matching contribution account will receive the Matching contributions that were in a previous Beneficiary’s name.

(5) A Purchaser may not remove his or her name from a Matching contribution account and substitute it with another Purchaser’s name; however, a Purchaser’s name may be removed from a Matching contribution account upon the Purchaser’s death, divorce, or Permanent disability.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-808(d), and 65-5- 113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Repeal and new rule filed April 11, 2014; effective September 28, 2014. Amendments filed February 13, 2025; effective May 14, 2025.

Tenn. Comp. R. & Regs. 1700-05-03-.07 AMOUNT OF MINIMUM AND MATCHING CONTRIBUTION

(1) For the first Fiscal year that the Matching grant incentive program is in operation, the Minimum contribution for participation in the Matching grant incentive program made by the Purchaser shall be twenty-five dollars ($25.00), and the Matching contribution shall be four (4) times the Minimum contribution, up to a maximum Matching contribution of five hundred dollars ($500.00). The maximum contribution that can be made by a Purchaser in order to receive the maximum Matching contribution shall be one hundred twenty-five dollars ($125.00); however, the Purchaser is not prohibited from contributing more to his or her Eligible college savings plan Account without the expectation of receiving a higher Matching contribution. For each subsequent year or a portion of the year that the Matching grant incentive program is in operation, the Board may either set the Minimum and Matching contribution or delegate the responsibility of establishing the Minimum and Matching contributions to the State Treasurer. The Minimum or Matching contributions may be established or amended at any time, and may be established for any duration of time deemed necessary by either the Board or the State Treasurer. The Matching contribution amount for the Matching grant incentive program shall be determined either by the Board or the State Treasurer based upon the amount appropriated in that year’s general appropriations act for the purposes set forth in these rules, the number of program Participants, and the anticipated level of participation in the program.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-808(d), and 65-5- 113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Repeal and new rule filed April 11, 2014; effective September 28, 2014.

Tenn. Comp. R. & Regs. 1700-05-03-.08 CONTRIBUTIONS AND WITHDRAWALS

(1) Contributions.

(a) Purchaser contributions to the Matching grant incentive program shall be made in accordance with Rule 1700-05-04-.04 by those Purchasers who qualify for participation in the program for a Beneficiary or Beneficiaries. Purchaser contributions will be subject to the limitations established in Rule 1700-05-04-.04.

(b) Matching contributions shall be made by the Board for each Beneficiary but shall be maintained in a Matching contribution account separate from the Account that contains the Purchaser’s contributions.

(2) Withdrawals.

(a) Eligibility, Written Request, Amount and Timing of Withdrawals. A Purchaser may request a Withdrawal from the Account and Matching contribution account if the contributions and Matching contributions have been on deposit for a period of time consistent with the deposit period contained in Tenn. Comp. R & Regs. 1700-05-04- .06(1). The Purchaser’s Withdrawal of contributions and Matching contributions are subject to the requirements contained in Rule 1700-05-04-.06(1), (2) and (3).

(b) Withdrawals for Qualified Higher Education Expenses. The Purchaser may use either Purchaser contributions or the Matching contributions to pay for Qualified higher education expenses by directing payment to the Purchaser, the Beneficiary, or an Eligible educational institution as an advance payment or as reimbursement for Qualified higher education expenses. Third party documentation to substantiate the request may be required unless otherwise provided for in § 529 of the Internal Revenue Code or the regulations promulgated thereunder.

(c) Withdrawals for Non-Qualified Higher Education Expenses. The Purchaser may only use Account contributions, and not Matching contributions, to pay for non-Qualified higher education expenses, provided that the Account contributions have been on deposit in the Account for a period of time consistent with the deposit period contained in Tenn. Comp. R & Regs. 1700-05-04-.06(1). Such a Withdrawal may be made without causing termination of the Contract and without requiring the Purchaser to establish that the withdrawal of the Account contributions will be used for Qualified higher education expenses. The earnings portion of withdrawals made for non- Qualified higher education expenses could be subject to federal taxation as prescribed under the sections of the Internal Revenue Code and the regulations promulgated thereunder that are applicable to the program.

(d) Scholarship Refund. A Purchaser may request a Withdrawal of all or a portion of the Account contributions as a scholarship refund in accordance with the requirements contained in Tenn. Comp. R & Regs. 1700-05-04-.06(4)(c). A Purchaser may not request a Withdrawal of all or a portion of the Matching contribution account as a scholarship refund.

(e) Contract Termination and Refund. A Purchaser may terminate a Contract for an Account as provided in Rule 1700-05-04-.06(4)(a)–(f) and receive a refund in accordance with Rule 1700-05-04-.06(4)(a)–(f). In the event that a Contract for an Account is terminated due to the Permanent disability or death of the Beneficiary, the Matching contributions will revert back to the Board. In the event the Contract for an Account is terminated for any other reason or purpose other than Permanent disability or death of the Beneficiary, Matching contributions may be used for Qualified higher education expenses, unless the Matching contribution account is inactive in accordance with subparagraph (g) of this rule.

(f) Rollovers out of the Program. The Purchaser may rollover all or a portion of the Redemption Value of the Account to an account established for another Beneficiary under the qualified tuition program established under § 529 of the Internal Revenue Code by making a rollover request to the Board on such forms as may be prescribed by the Board. If the rollover is for the benefit of another Beneficiary, the Beneficiary to whose Account the funds are being transferred must be a Member of the family of the ori ginal Beneficiary. Any rollover under this Rule shall be administered in accordance with the applicable rollover provisions of the Internal Revenue Code. Any rollover made under this paragraph shall be equal to the amount requested, not to exceed the Redemption Value of the Account and any applicable fees charged by the Board. The Redemption value of the Account shall be determined as of the date the rollover is made. Rollover of any funds in the Matching contribution account is not permitted.

(g) Inactivity and Return of Matching contributions. Matching contributions will be returned to the Board if:

A period of ten (10) consecutive years passes with no contributions or Withdrawals having been made to or from a Beneficiary’s Matching contribution account or with no correspondence from the Purchaser or Beneficiary. The ten (10)-year period shall not commence any earlier than the year the Beneficiary becomes eighteen (18) years of age; or 2. The Purchaser voluntarily sends the Matching contributions back to the State at any time prior to the expiration of the ten (10)-year period contained in this subparagraph.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-808(d), 49-7-811, 49-7-812, and 65-5-113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Repeal and new rule filed April 11, 2014; effective September 28, 2014. Amendments filed February 13, 2025; effective May 14, 2025.

Tenn. Comp. R. & Regs. 1700-05-03-.09 NO GUARANTEE OF A MATCHING CONTRIBUTION

(1) Notwithstanding any provision of these rules to the contrary, neither the State, the Board, the Matching grant incentive program, nor the Eligible college savings program guarantees that any Beneficiary will receive a Matching contribution. The availability or the amount of the Matching contributions authorized by these rules are subject to the appropriation of funds in each year’s general appropriations act for the purposes set forth in these rules.

History

Authority: Chapter 359 of the 2013 Public Acts codified in T.C.A. §§ 49-7-805, 49-7-805(4), 49-7- 805(16), 49-7-808(d), and 65-5-113(c).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. Amendment filed April 11, 2014; effective September 28, 2014.

Tenn. Comp. R. & Regs. 1700-05-03-.10 EXTENT OF AVAILABLE FUNDS

(1) In the event the Board receives more eligible applications for the Matching contribution than the amount of money appropriated by the General Assembly during a given Qualifying period, the Board will award the Matching contribution to the first eligible applicants to apply until the available funds have been exhausted.

(2) In the event excess appropriations remain in any given fiscal year after providing the Matching contributions to all eligible applicants, the excess funds will be transferred to the educational services plan established in Chapter 1700-05-01 of the Official Compilation of the Rules and Regulations of the State of Tennessee, unless the General Assembly otherwise directs.

History

Authority: T.C.A. §§ 49-7-805(4) and 49-7-805(16).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Chapter 1700-05-04 Educational Investment Plan

Tenn. Comp. R. & Regs. 1700-05-04-.01 IN GENERAL

(1) Purpose. T.C.A. Title 49, Chapter 7, Part 8 created the Tennessee College Savings Trust Act. The Act creates a trust program, as an agency and instrumentality of the State of Tennessee, under which families and other interested persons may save and invest for the qualified higher education expenses of attending an eligible educational institution. The Program may be comprised of two (2) types of qualified tuition plans as defined in the Code, including one (1) or more educational investment plan or plans, which may consist of several different investment offerings or one (1) or more educational services plan or plans. The

purpose of these rules is to establish requirements for participation, and administration of an educational investment plan as required by and consistent with the Act.

(2) Definitions. For purposes of these rules:

(a) “Academic Term” means the school segment consisting of a single semester, quarter, term or equivalent.

(b) “Account” has the same meaning as set forth in T.C.A. § 49-7-802(7).

(d) “Beneficiary” means an individual designated by the Account Owner and who meets the requirements of the Code.

(e) “Board” has the same meaning as given in T.C.A. § 49-7-802(3), which is comprised of the members described in T.C.A. § 49-7-804(a).

(f) “Code” has the same meaning as set forth in T.C.A. § 49-7-802(4).

(g) “Contract” means an Educational Investment Plan entered into under T.C.A. § 49-7- 808 by the Board and an Account Owner to provide for the payment of Qualified Higher Education Expenses.

(h) “Contributor” has the same meaning as set forth in T.C.A. § 49-7-802(5).

(i) “Custodial Guardian” means the person with whom the child resides a majority of the time where there is an order of joint custody or where there exist parenting plans pursuant to Title 36, Chapter 6, Part 4 that address issues of custody. “Custodial Guardian” also includes, in addition to a biological or legal parent having legal custody of a child, an individual to whom legal custody of the child has been given by a court of competent jurisdiction.

(j) “Educational Investment Plan” has the same meaning as set forth in T.C.A. § 49-7- 802(6).

(k) “Eligible Educational Institution” has the same meaning as set forth in T.C.A. § 49-7- 802(9).

(l) “Legal G uardian” means a person or entity that has the legal authority to provide for the care, supervision or control of a minor child as established by law or court order.

(m) “Legally Incompetent” means that an individual has been declared incompetent by a court of law. An individual shall not be considered to be Legally Incompetent unless proof thereof is furnished in such form and manner as the Board may require.

(n) “Member of the Family” has the same meaning as “member of the family” under the sections of the Internal Revenue Code which are applicable to the Program.

(o) “New Beneficiary” means an individual to whom rights under the Contract have been transferred pursuant to Rule 1700-05-04-.05.

(p) “Permanent Disability” means the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to have a Permanent Disability unless proof is furnished of the existence thereof from a health care professional in such form and manner as the Board may require. The Board must approve any finding of a Permanent Disability.

(q) “Person” shall mean an individual, partnership, corporation, association, organization, government or governmental subdivision or agency, estate, trust or any other legal or commercial entity.

(r) “Program” has the same meaning as set forth in T.C.A. § 49-7-802(11).

(s) “Qualified Higher Education Expenses” shall have the same meaning as set forth in T.C.A. § 49-7-802(13).

(t) “Redemption Value” has the same meaning as set forth in T.C.A. § 49-7-802(14).

(u) “Refund Recipient” has the same meaning as set forth in T.C.A. § 49-7-802(15). The Refund Recipient may only be the Account Owner.

(v) “Successor Account Owner” means the person named in the Contract by the Account Owner to exercise the rights of the Account Owner under the Contract if the Account Owner dies or becomes Legally Incompetent. The Successor Account Owner may be the Beneficiary. The Account Owner may change the designation at any time in writing to the Board. If the Account Owner dies or becomes Legally Incompetent, the Successor Account Owner shall automatically become the Account Owner for purposes of these Rules and the Contract, including, but not limited to constituting the Refund Recipient. In the event the Account Owner dies or becomes Legally Incompetent and no surviving Successor Account Owner exists, the surviving Successor Account Owner is Legally Incompetent or declines to serve, or the Account Owner did not designate a Successor Account Owner, the Beneficiary shall automatically become the Account Owner for purposes of these Rules and the Contract, including, but not limited to constituting the Refund Recipient. If the Beneficiary is a minor, the following shall apply:

The Beneficiary’s Legal Guardian shall exercise the rights under these Rules and the Contract on behalf of the Beneficiary until the Beneficiary reaches majority.
If the Beneficiary has more than one Legal Guardian, the Beneficiary’s Custodial Guardian shall exercise the rights on behalf of the Beneficiary until the Beneficiary reaches majority.
If the Beneficiary has more than one Custodial Guardian, the Custodial Guardians shall elect from among themselves the person who will exercise the rights on behalf of the Beneficiary until the Beneficiary reaches majority. In the event the Custodial Guardians cannot agree, the Custodial Guardian whose birthday is earlier in the calendar year shall exercise the rights on behalf of the Beneficiary until the Beneficiary reaches majority.
The Beneficiary’s Legal Guardian shall promptly report to the Board any changes in the legal guardianship of the Beneficiary.

(w) “Termination” means a discontinuance of the right to receive tuition payments or other benefits under a Contract.

(x) “Withdrawal” means a disbursement of funds from the Account that is directed by the Account Owner to be paid to the Account Owner, an Eligible Educational Institution, or the Beneficiary.

History

Authority: T.C.A. §§ 49-7-801, 49-7-802, 49-7-802(3), 49-7-803, 49-7-805, 49-7-805(14), 49-7-805(16), 49-7-807, 49-7-808, 49-7-809, 49-7-811, 49-7-812, 49-7-823, and 49-7-824.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-04-.02 BOARD OPERATIONS

(1) Meetings.

(a) How Called. The Board shall meet at the call of the Chair or upon written request to the Chair by four (4) members of the Board. Unless circumstances prevent, the Secretary shall notify members of the date, time and location of each meeting at least two (2) days prior to the date of the meeting. Notice of the Board meetings shall be posted, and Board meetings conducted electronically or by other means of communication shall be conducted in accordance with T.C.A., Title 8, Chapter 44, Part 1 and other applicable laws and rules.

(b) Quorum. Five (5) members of the Board shall constitute a quorum for the transaction of business at a meeting of the Board. Voting upon action taken by the Board shall be conducted by a majority vote of the members present at the meeting of the Board; provided five (5) Board members are present at the meeting.

(c) Designees. Each member of the Board may designate a member of his or her staff to attend meetings of the Board and to exercise the member’s right to vote in the member’s absence. The designations must be made in writing to the Chair of the Board. A member participating in a meeting through a designee shall be deemed present at the meeting for purposes of quorum and voting requirements.

( 2) Board Officers.

(a) Chair. The State Treasurer shall serve as Chair of the Board. The Chair shall preside at meetings of the Board and, together with the Board Secretary, set the agenda for each meeting. If the Chair is unable to attend a meeting of the Board, the Chair’s designee shall preside at the meeting. The Chair shall have other duties and powers as may be assigned by the Board by majority vote.

(b) Secretary. The Director of the College Savings Trust Fund Program shall be the Board Secretary. The Secretary shall keep an accurate record of the proceedings and actions of the Board. Together with the Chair, the Secretary shall set the agenda for each meeting, notify the Board members and the public of meetings and distribute appropriate materials to the Board members.

(3) Delegation to State Treasurer. The Board hereby delegates to the State Treasurer the duty to carry out the day-to-day operations and responsibilities of the Educational Investment Plan, including, but not limited to, the duty to prescribe and approve the terms and conditions of any payroll deduction agreement authorized pursuant to T.C.A. § 49-7-805. In exercising such delegation, the State Treasurer shall be authorized to exercise such powers as are vested in the Board which are necessary to fulfill the delegated duties and responsibilities, and may assign any such duties and responsibilities to his staff as he deems necessary and proper. The State Treasurer may also contract for the provision of all or any part of the services necessary for the management and operation of the Plan, provided the State Treasurer or his staff is actively involved on an ongoing basis in the administration of the Plan.

History

Authority: T.C.A. §§ 49-7-804, 49-7-805, and 49-7-805(16).
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed September 25, 2018; effective December 24, 2018. Amendments filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-04-.03 ENROLLMENT

(1) Requirements. The Account Owner must fully complete the Contract, including all required signatures, and return the signed Contract to the Board to open an Account in the Educational Investment Plan. A Contract shall not become binding upon the Board and the Account Owner unless it is complete and until all of the following occur:

(a) Investment Selection. The Account Owner must select at least one investment option.

If more than one investment option is chosen, the Account Owner must allocate the contribution among the chosen investment options. The Board may limit the number of investment options that an Account Owner may choose under any one single Contract;

(b) Initial Contribution. Receipt by the Board of an initial contribution of at least twenty-five dollars ($25.00). All contributions to an Account hereunder may be made only in cash and not in property. For purposes of these Rules, “cash” means United States dollars in the form of negotiable checks (other than travelers checks, starter checks and credit card convenience checks), and payments made through payroll deductions, automatic bank account deductions or other similar methods acceptable to the Board;

(c) Board Acceptance. Acceptance of the signed Contract by the Board; and (d) Social Security Numbers. To enable the Board to comply with the record keeping and reporting requirements of the Internal Revenue Code, disclosure of the Social Security numbers requested in the Contract is mandatory. In the case of newborns who do not yet have a Social Security number, the Board will accept the Contract conditionally for thirty (30) calendar days of receipt of the proposed Contract.

(2) Confirmation. Upon acceptance of the Contract, the Board will send a confirmation of acceptance to the Account Owner and will credit the Account of the named Beneficiary with the amount of the initial contribution made.

(3) Rejection. If an Account Owner fails to provide all the information required in Paragraph (1) of this Rule within thirty (30) calendar days of the Board’s receipt of the proposed Contract, the Board may reject the proposed Contract and refund to the Account Owner all amounts paid thereunder, less any applicable fees. Rejection of a Contract shall not preclude the Account Owner from enrolling in the Program in the future.

(4) Fraud. The Board may, at its sole discretion, terminate the Contract if the Beneficiary, the Account Owner, or the Successor Account Owner knowingly makes any false statement, or falsifies or permits to be falsified any record or records of the Program. The amount of the refund to which the Account Owner is entitled under this Paragraph (4) shall be equal to the Redemption Value of the Account at the time the refund is made, minus any applicable fee charged by the Board.

(5) Inactivity. If a period of ten (10) consecutive years passes with no contributions having been made to the Beneficiary’s Account or with no correspondence from the Beneficiary, Account Owner or the Successor Account Owner, the Board shall report and deliver the amount of any refund payable under the Contract to the State Treasurer pursuant to T.C.A., Title 66,

Chapter 29, Part 1. Prior to delivering the refund to the State Treasurer, the Board will make reasonable efforts to locate the Account Owner, Beneficiary, and the Successor Account Owner. The refund shall be equal to the Redemption Value of the Account at the time the refund is delivered, minus any applicable fee charged by the Board. The ten-year period shall not commence any earlier than the year the Beneficiary becomes eighteen (18) years of age, or the year the Account was established, whichever is later. Upon payment of the refund to the State Treasurer, the Board’s obligations under the Contract shall cease.

(6) Fees. The Board may charge fees to the Account Owner and/or collect fees from each Account for administration of the Program or for transactions under the Educational Investment Plan.

(7) Separate Accounting. The Board will maintain a separate individual Account for each Contract, showing the name of the Beneficiary and the Redemption Value of the Account, including any Withdrawals made from the Account.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(14), 49-7-805(16), 49-7-806, 49-7-808, 49-7-809, and 49-7-812.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed September 25, 2018; effective December 24, 2018. Amendments filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-04-.04 CONTRIBUTIONS

(1) Who May Make Contributions. Contributions may be made for an existing Account by an Account Owner or a Contributor; however, all contributions once made to an individual Account are pooled and are subject to the terms and conditions of the applicable Contract.

(2) How Contributions May be Made. Contributions may be made only in cash and not property.

For purposes of these rules “cash” has the meaning given in Rule 1700-05-04-.03(1)(b) above. Contributions may also be made in accordance with the Code as defined in T.C.A. § 49-7-802(4).

(3) Limit on Amount of Contributions. Subject to Section 529 of the Internal Revenue Code and the regulations promulgated thereunder, more than one individual may have an Educational Investment Plan on behalf of the same Beneficiary. Provided, however, that no additional contributions can be made to any Account on behalf of the same Beneficiary if at the time of the proposed contribution the total Account balance of all Accounts on behalf of the same Beneficiary total a certain dollar amount as determined by majority vote of the Board pursuant to Rule 1700-05-04-.02(1)(b). Such dollar amount will be set by the Board on an annual basis and shall not exceed the amount determined to be reasonably necessary to pay Qualified Higher Education Expenses for seven (7) years of undergraduate enrollment at the highest cost Eligible Educational Institution.

(4) No Guarantee of Acceptance nor Residency Status. Contributions to an Account hereunder do not guarantee that the Beneficiary will be accepted into an Eligible Educational Institution, that the Beneficiary will graduate from an Eligible Educational Institution, nor do contributions to an Account guarantee status as a resident for determining the rate of tuition charged by an Eligible Educational Institution.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(16), 49-7-806, 49-7-808, 49-7-809, 49-7-810, 49-7- 823, and 49-7-824.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed September 25, 2018; effective December 24, 2018. Amendments filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-04-.05 ACCOUNT MAINTENANCE

(1) Update Account Information. The Account Owner or any person authorized by the Account Owner may make changes and updates to the Account information as needed. These changes include, but are not limited to, addresses; legal name; phone numbers; email addresses; and changes to the designation of the Successor Account Owner. The changes must be provided in writing or via electronic means acceptable to the Board.

(2) Change of Beneficiary. Subject to the conditions set forth in Paragraph (5) below, the Account Owner shall have the right to change the Beneficiary of the Account at any time provided the New Beneficiary is a “Member of the Family” of the original Beneficiary, as such term is defined in Rule 1700-05-04-.01(2). If the Board has chosen to charge an application fee pursuant to Rule 1700-05-04-.03(6), then an application fee must be paid to change the Beneficiary of the Account.

(3) Reallocation of Funds Among Investment Options. Subject to the conditions set forth in Paragraph (5) below, the Account Owner shall have the right at any time to reallocate funds among investment options under a Contract held for a single Beneficiary.

(4) Transfer of Account Funds. Subject to the conditions set forth in Paragraph (5) below, the Account Owner shall have the right at any time to transfer all or a portion of the funds in the Beneficiary’s Account to an Account for a different Beneficiary provided the New Beneficiary is a “Member of the Family” of the original Beneficiary, as such term is defined in Rule 1700- 05-04-.01(2). If the transfer is for a portion of funds in the original Account, the transfer will be permitted so long as at the time the transfer is completed by the Board the existing Beneficiary and the new Beneficiary will each have at least twenty-five dollars ($25.00) in their respective Accounts. If the New Beneficiary does not have an existing Account and if the Board has chosen to charge an application fee pursuant to Rule 1700-05-04-.03(6), then an application fee must also be paid to open the new Account for the New Beneficiary. In addition and subject to the conditions set forth in Paragraph (5) below, the Account Owner shall have the right to transfer all or a portion of the funds in the Beneficiary’s Account to another Account held for the same Beneficiary. If the Board has chosen to charge a transfer fee pursuant to Rule 1700-05-04-.03(6), then a transfer fee must be paid to transfer the funds.

(5) Conditions. Any change of Beneficiary, reallocation of funds among investment options, or transfer of funds under this Rule is subject to the following conditions:

(a) The request must be made in writing, signed by the Account Owner and, if applicable, must state the name and Social Security number of the proposed New Beneficiary. If the request is for the reallocation of funds among investment options, the written request must specify the amount to be reallocated and the selected investment option(s). If the request is for a transfer of funds to an existing Account, the written request must state the Account number to which the transfer is to be made;

(b) Payment of any applicable fees charged by the Board pursuant to Rule 1700-05-04- .03(6); and (c) Transfers or changes in Beneficiaries under this Rule shall not be permitted to the extent that they would constitute excess contributions under Rule 1700-05-04-.04(3).

(6) Eligibility for Use. Any funds in the Account of a New Beneficiary may be used immediately, provided the funds have been on deposit in the original Beneficiary’s Account for the twentyone (21) day period prescribed in Rule 1700-05-04-.06(1) below.

(7) Limit on Reallocation of Funds Among Investment Options. The Account Owner may reallocate funds among investment options twice per calendar year or at such other times as permitted under Section 529 of the Internal Revenue Code and the regulations promulgated thereunder.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(14), 49-7-805(16), 49-7-808, and 49-7-809.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendment filed April 11, 2014; effective September 28, 2014. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed September 25, 2018; effective December 24, 2018. Amendments filed November 15, 2022; effective February 13, 2023.

Tenn. Comp. R. & Regs. 1700-05-04-.06 WITHDRAWALS

(1) Eligibility. The Account Owner may request a Withdrawal from the Account as long as the contributions that will be withdrawn have been on deposit in the Account for at least twentyone (21) calendar days. If the Account Owner desires the Board to send payment directly to the Eligible Educational Institution where the Beneficiary is enrolled, the notification must include the name and address of the Institution and the amount of funds needed to pay the Qualified Higher Education Expenses. Failure to provide sufficient notice prior to the start of the Academic Term in which the funds would be used may result in an untimely payment being made to the Institution.

(2) Written Request. Any Withdrawal requests must be made in writing by the Account Owner or via other means acceptable to the Board, including electronic means.

(3) Amount and Timing of Withdrawal. Subject to Rules 1700-05-04-.06(4) and 1700-05-04-.09 below, the Withdrawal amount will equal the amount requested, not to exceed the Redemption Value of the Beneficiary’s Account at the time the Withdrawal is processed. The Withdrawal amount will be paid within sixty (60) calendar days of receipt by the Board of a complete, accurate and legible request.

(4) Types of Withdrawals.

(a) Withdrawals for Qualified Higher Education Expenses. The Account Owner may direct a Withdrawal from the Account to the Account Owner, the Beneficiary, or an Eligible Educational Institution as an advance payment or as reimbursement for Qualified Higher Education Expenses. Third party documentation to substantiate the request shall not be required unless otherwise provided for in Section 529 of the Internal Revenue Code or the regulations promulgated thereunder.

(b) Withdrawals for Non-Qualified Higher Education Expenses. The Account Owner may direct a Withdrawal from the Account for the payment of non-Qualified Higher Education Expenses. Such a Withdrawal may be made without causing termination of the Contract and without requiring the Refund Recipient to establish that the Withdrawal will be used for Qualified Higher Education Expenses. The earnings portion of Withdrawals made for non-Qualified Higher Education Expenses could be subject to federal taxation as prescribed under the sections of the Internal Revenue Code and the regulations promulgated thereunder which are applicable to the Program.

(c) Scholarship Refund. If a Beneficiary is the recipient of a scholarship, allowance or payment described in Section 25A(g)(2) of the Internal Revenue Code that the Board determines cannot be converted into money by the Beneficiary, the Account Owner may request a Withdrawal of all or a portion of the funds in the Account. The Account Owner must furnish information about the scholarship, allowance or payment to the Board. If the scholarship, allowance or payment has a duration that extends beyond one (1) Academic Term, the Account Owner may request a refund in advance of the scholarship payment. The amount of the refund payable to the Account Owner will be equal to the Redemption Value of the Beneficiary’s Account that is not needed to cover the future Qualified Higher Education Expenses on account of the scholarship, allowance or payment minus any applicable fee(s) charged by the Board.

(d) Contract Termination and Refund. Except as provided in Paragraph (4)(c) of this Rule above, a Contract may not be terminated for any reason except under one of the following circumstances: (i) the Beneficiary has died or suffers from a Permanent Disability; (ii) the Beneficiary is age eighteen (18) or older and has decided not to attend an Eligible Educational Institution; (iii) the Beneficiary has completed the requirements for a degree that is less than a bachelor’s degree at an Eligible Educational Institution and the Beneficiary does not plan to pursue further education; or (iv) the Beneficiary has completed the bachelor’s degree requirements at an Eligible Educational Institution. The Contract termination request must be accompanied with documentation acceptable to the Board to substantiate the reason for Contract termination. In the event a Contract is terminated due to the Permanent Disability or death of the Beneficiary, the amount of the refund paid to the Account Owner shall be equal to the Redemption Value of the Account at the time the refund is made. In the event a Contract is terminated under any of the conditions described in items (ii)–(iv) above, the amount of the refund paid to the Refund Recipient shall be equal to the Redemption Value of the Account at the time the refund is made, minus any applicable fee charged by the Board. The Actual termination of the Contract will not occur until all funds in the Beneficiary’s Account have been refunded.

(e) Rollovers Out of the Program. The Account Owner may rollover all or a portion of the funds in the Beneficiary’s Account to an Account established for the same Beneficiary or another Beneficiary under another qualified tuition program established under

Section 529 or Section 529(A) of the Internal Revenue Code and the regulations promulgated thereunder by making a rollover request to the Board in such manner as may be prescribed by the Board. If the rollover is for the benefit of another Beneficiary, the Beneficiary to whose Account the funds are being transferred must be a “Member of the Family” of the original Beneficiary, as such term is defined in Rule 1700-05-04- .01(2). Any rollover under this Rule shall be administered in accordance with the applicable rollover provisions of the Internal Revenue Code. Any rollover made under this Paragraph shall be equal to the amount requested, not to exceed the Redemption Value of the Beneficiary’s Account, minus any applicable fees charged by the Board pursuant to Rule 1700-05-04-.03(6) above. The Redemption Value of the Account shall be determined as of the date the rollover is made.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(16), 49-7-809, 49-7-811, and 49-7-812.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed April 11, 2014; effective September 28, 2014. Amendments filed March 5, 2018; effective June 3, 2018. Amendments filed September 25, 2018; effective December 24, 2018.

Tenn. Comp. R. & Regs. 1700-05-04-.07 REPORTING AND NOTICE

(1) Reporting. A statement listing the activity, selected investment options, and Redemption Value of the Account will be sent to the Account Owner periodically. The frequency of such statements will be set by the Board. If a payment has been made from an Account, the Board will report to the Beneficiary or the Account Owner, whichever is applicable, information about such payments to assist in determining that person’s tax liability. The report will be furnished by no later than January 31st of the calendar year following the calendar year in which the payment was made. Disclosure documents will also be prepared by the Treasurer and made available to the Account Owner prior to the Account Owner opening an Account.

(2) Notice. Notice from the Program or Board, including but not limited to, Account statements, tax forms, and information about the Program, a Contract or an Account, may be in any form acceptable to the Board, which may include, but may not limited to, notice and reporting by electronic means.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(16), and 49-7-809.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018.

Tenn. Comp. R. & Regs. 1700-05-04-.08 CONTRACT DESIGNATIONS MAY NOT BE DEFEATED BY WILL

(1) The right of a Beneficiary or Account Owner to receive benefits in accordance with a Contract shall not be defeated or impaired by any statute or rule of law governing the transfer of property by will or by intestate succession.

History

Authority: T.C.A. §§ 49-7-802 and 49-7-805(16).
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 29, 2012. Amendments filed March 5, 2018; effective June 3, 2018.

Tenn. Comp. R. & Regs. 1700-05-04-.09 PLAN TERMINATION

(1) If the Board determines that the Educational Investment Plan is, for any reason, financially unfeasible, or is not beneficial to the citizens of Tennessee or to the State itself, then the Board, pursuant to T.C.A. § 49-7-823, may terminate the Contracts. Subject to Paragraphs (2) and (3) of this Rule below, the amount of the refund to which the Account Owner is entitled shall be equal to the Redemption Value of the Account at the time the refund is made.

(2) Notwithstanding any other provision to the contrary, refunds and other benefits payable under a Contract shall be deemed to be due and payable only to the extent that moneys are available therefore to the credit of the Educational Investment Plan, and neither the State nor the Board shall be liable for any amount in excess of such sums.

(3) Should the Educational Investment Plan be terminated by the Board and the assets of the fund prove to be less than would be required to fully pay all obligations of the Plan in full, the Board shall first defray all administrative expenses of the Plan. The Board shall then reduce payments owed pursuant to a Contract, pro rata, to the degree necessary to bring the total disbursement of the Educational Investment Plan within the amount of the remaining funds.

History

Authority: T.C.A. §§ 49-7-802, 49-7-805, 49-7-805(16), 49-7-823, and 49-7-824.
Administrative History: Emergency rule filed December 29, 2011; effective through June 26, 2012. New rule filed December 29, 2011; effective May 30, 2012. Amendments filed March 5, 2018; effective June 3, 2018.

Chapter 1700-06-01 Small and Minority-Owned Business Assistance Program

Tenn. Comp. R. & Regs. 1700-06-01-.01 IN GENERAL

(1) Purpose. Chapter 830 of the Tennessee Public Acts of 2004 created within the Tennessee Treasury Department the Small and Minority-Owned Business Assistance Program. By rule, the Department is to develop an assistance program for small and minority-owned businesses, as defined in §65-5-112, which may include loans, technical assistance and services, and consulting and educational services. The Program is funded from the Small and Minority-Owned Business Assistance Program Fund. It is the legislative intent that the Department use the assistance provided by this program to support outreach to new, expanding, and existing businesses in Tennessee that do not have reasonable access to capital markets and traditional commercial lending facilities.

History

Authority: T.C.A. §§65-5-113, and 65-5-112.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.02 DEFINITIONS

The following definitions shall apply to these rules:

(1) “Act” means Chapter 830 of the Tennessee Public Acts of 2004.

(2) “Applicant” means a Qualifying Business that has filed an Application for Program Assistance.

(3) “Application” means the form required of an Applicant for Program Assistance, which requests a Loan, and/or Program Services.

(4) “Department” means the Tennessee Treasury Department.

(5) “Gross Receipts” means the annual total revenue exclusive of deductions.

(6) “Ineligible Business” means a church, non-profit organization, insurance company, real estate contractor, real estate developer, night club and any similar entertainment-oriented business, a business that does not create or provide jobs, and a business not incorporated or located in Tennessee.

(7) “Loan” means a loan for a specific Project for which the Applicant has requested Program Assistance. The following shall be considered acceptable purposes for which a Loan may be made under the Loan Program: acquisition of machinery and equipment; working capital;

Rule 1700-6-1-.02, continued supplies and materials; inventory; and other business-related activity as approved by the Program Administrator. A line of credit shall be considered a Loan under the Program. Lending for the acquisition of real estate shall be excluded from the Program.

(8) “Minority-Owned Business” means a business that is solely owned, or at least fifty-one percent (51%) of the assets or outstanding stock of which is owned, by an individual who personally manages and controls the daily operations of such business, and who is impeded from normal entry into the economic mainstream because of race, religion, sex, or national origin. Any business certified as a minority-owned business from the Governor’s Office of Diversity Business Enterprise or the United States Small Business Administration shall be considered a minority-owned business for purposes of the Program. Certification from other recognized entities such as Minority Purchasing Councils and Airport Authorities may be acceptable at the discretion of the Program Administrator.

(9) “Program” means the Small and Minority-Owned Business Assistance Program created by the Act. The Program includes the following components: Loans, and Program Services.

(10) “Program Administrator” means the organization selected pursuant to Rule 1700-6-1-.04 below to administer the Program.

(11) “Program Assistance” means Loans, and Program Services as described in these Rules.

(12) “Program Fund” means the Small and Minority-Owned Business Assistance Program Fund created by the Act.

(13) “Program Services” mean services that include, but are not limited to, technical assistance, education and consulting services provided under the Program to Qualifying Businesses that may or may not be making Application for a Loan. The Program Administrator shall be responsible for providing Program Services to Qualifying Businesses except that Program Services under the Loan Program shall be provided pursuant to Rule 1700-6-1-.13 below.

(14) “Project” means the business activity as proposed by the Applicant in the Application and the approved purpose of the Loan. Loans will only be made on behalf of Applicants for Loans that initially finance a Project. The refinancing of any existing debt shall not be considered eligible for a Loan.

(15) “Qualifying Business” means a sole proprietorship, a partnership, a limited liability partnership, a limited liability corporation, or any other incorporated entity which satisfies the following definitions under these Rules: is not an Ineligible Business; is either a Small Business or a Minority-Owned Business; is eligible to do business in Tennessee; and is located in and maintains operations in Tennessee at the time Program Services are requested and for the term that Program Services are provided. A material change in any of the foregoing qualifications may be cause for denial or revocation of any Program Assistance.

(16) “Qualified Organization” means an organization whose central purpose is economic development.

Such organizations specifically include, but are not limited to, organizations qualified as Community Development Entities by the United States Treasury Department and organizations licensed and regulated by the Federal Small Business Administration as a 301(d) Small Business Investment Company, also known as a Specialized Small Business Investment Company.

(17) “Reasonable Access” means, unless otherwise indicated, a Minority-Owned Business meeting the criteria of a Qualifying Business shall be considered not to have reasonable access to capital markets and traditional commercial lending facilities.

Rule 1700-6-1-.02, continued (18) “Small Business” means a Qualifying Business with annual gross receipts of less than four million dollars ($4,000,000).

(19) “Treasurer” means the Tennessee State Treasurer.

History

Authority: T.C.A. §§65-5-113, and 65-5-112.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.03 ADMINISTRATION OF THE PROGRAM

(1) In General. The Program shall be administered by a Program Administrator. The Program’s general approach to each area of Program Assistance is as follows:

(a) Loans. The Program will loan funds at below market rates to selected Qualified Organizations. Qualified Organizations shall be responsible for originating and servicing loans and for referring Qualifying Businesses to the Program Administrator for needed Program Services.

(b) Program Services. The Program Administrator will develop a network of service providers to support Qualifying Businesses seeking Program Assistance.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.04 PROGRAM ADMINISTRATOR

(1) In General. The Program shall be administered by an organization selected through a competitive procurement process. The specific terms of administration shall be contained within a contract executed by the selected organization and the Department.

(2) Selection. The procurement process shall be based on the evaluation of proposals submitted. At a minimum, the organization selected shall have a demonstrated knowledge and experience of at least three years in providing and/or coordinating the types of program assistance to the Qualifying Businesses as envisioned under the Program.

(3) General Duties. The general duties of the Program Administrator shall include, but shall not be limited to, the following:

(a) Loan Program. The Program Administrator shall assist the Department with the selection of Qualified Organizations to whom Program Funds will be loaned for re-lending to Qualifying Businesses.

(b) Program Services. The Program Administrator shall coordinate the selection of entities to provide Program Services to Qualifying Businesses.

At the request of the Department of Economic and Community Development and the Governor’s Office of Diversity Enterprise, the Program Administrator shall provide information relative to the Program.

(4) Reporting. As specified in the contract, the Program Administrator shall report to the Department, which has the ultimate responsibility and authority over the Program.

Rule 1700-6-1-.04, continued

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.05 ALLOCATION OF FUNDS

(1) Intent. It is the intent that the Program be designed with consideration of fair distribution of Program Assistance. To effectuate this intent, Program Assistance is to be fairly distributed among the geographic divisions of the State, with a maximum of forty percent (40%) of such assistance allocated to any grand division.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006. Amendment filed January 26, 2007; effective May 31, 2007.

Tenn. Comp. R. & Regs. 1700-06-01-.06 REFERRAL PREFERENCE

(1) A Qualifying Business referred to the Program Administrator or to a Qualified Organization from the Department of Economic and Community Development or the Governor’s Office of Diversity Enterprise shall be given the highest priority for Program Funds available for Loans, and Program Services.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.07 ACCOUNTABILITY

(1) The Department shall annually summarize Program activities in a report to the General Assembly.

Such report shall also include the financial statements of the Program.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.08 AUTHORITY OVER PROGRAM FUND

(1) The Program Fund shall be retained as a segregated account in the State Treasury.

(2) With regard to Loan Guarantees in existence prior to the effective date of these Rules, a reserve shall be created in the Program Fund to support outstanding Loan Guarantees. This reserve shall equal one hundred percent (100%) of outstanding Loans Guarantees.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.09 LOAN PROGRAM

(1) In General. The Program will loan funds at no cost to selected Qualified Organizations. Qualified Organizations shall be responsible for originating and servicing loans, and for coordinating with the Program Administrator for needed Program Services to Qualifying Businesses receiving loans from such organizations. Selected Qualified Organizations may retain the interest rate earnings to finance their cost for operations and to earn a profit. In making a determination of the number of Qualified Organizations to be selected, primary consideration will be given to assure that geographic coverage is sufficient to service the Program. Qualified Organizations shall be competitively selected, with no more than two (2) organizations selected for each grand division of the State. The Tennessee State Treasurer may waive in whole or in part the grand division

Rule 1700-6-1-.09, continued restriction where it is determined to the Treasurer’s satisfaction that the restriction would hinder the adequate distribution of Program Assistance from a geographic and service standpoint.

(2) As principal and interest is repaid to a Qualified Organization, the principal amount may be retained by the Qualified Organization to be used for new loans to other Qualifying Businesses, provided the Qualified Organization adheres to Program requirements.

(3) Loan Conditions of Program to Qualified Organizations.

(a) Interest Rate. The Program shall lend Program Funds to selected Qualified Organizations at no interest cost.

(b) Loan Amount. The maximum amount available to be loaned to a Qualified Organization for the purpose of being loaned to Qualifying Businesses shall be established in the contract between the Department and the Qualified Organization.

(c) Term. Loans to Qualified Organizations shall be for a term of ten (10) years and shall be renewable for additional five (5) year terms, at the option of the Treasurer.

(d) Funds Drawdown. Selected Qualified Organizations may initially draw down $300,000 for making loans to Qualifying Businesses. After the initial draw down, a Qualified Organization may draw down blocks of $100,000 or more to replenish loans made to Qualifying Businesses until the maximum amount available pursuant to the contract is received. Replenishment shall be net of loans made to Qualifying Businesses and the receipt of repayment of loan principal by Qualifying Businesses.

(e) Repayment of Loans to Program Fund. The repayment of loan principal may be deferred until the end of the loan term. In the event of a loan default by a Qualifying Business, upon presentation of proof by the Qualified Organization of diligent attempts for collection to the Program Administrator, the Qualified Organization may be released from repayment of the loan to the Program. Efforts shall include attempts to collect collateral and assets acquired by Program Funds.

(f) Loan Review. Loans made with Program Funds are subject to quality assurance reviews by the persons designated by the Department. Qualified Organizations shall cooperate with such reviews.

(4) In furtherance of the legislative intent that the Program serve businesses in Tennessee that do not have reasonable access to capital markets and traditional commercial lending facilities, it is acknowledged that loan losses will occur. It is expected that the loan losses will exceed industry standards.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006. Amendment filed January 26, 2007; effective May 31, 2007.

Tenn. Comp. R. & Regs. 1700-06-01-.10 QUALIFIED ORGANIZATION

(1) The Qualified Organization shall use Program Funds to make Loans to Qualifying Businesses for the purpose of starting and expanding their businesses. The Program Administrator shall disburse the funds to Qualified Organizations across all areas of the State of Tennessee, thereby expanding opportunities for Qualifying Businesses throughout Tennessee.

(2) Selection of Qualified Organizations.

Rule 1700-6-1-.10, continued (a) Process. The Program Administrator shall assist the Department with the selection of Qualified Organizations. Such selection shall be a competitive process. Factors to be considered in such selection shall include, but are not limited to:

Qualifications. Selected organizations must have individuals who have demonstrated qualifications in lending activities.
Experience. Selected organizations should reflect a history of lending activities of the type envisioned for the Program. Organizations should be able to demonstrate their track record of originating loans to Qualifying Businesses and the level of success in repayment of such loans.
Loan Servicing. Selected organizations must have a demonstrated ability and history of successfully servicing loans of the type envisioned for the Program.
Commitment to adhere to Program Requirements. Selected organizations must indicate a commitment and ability to comply with the Program intent and requirements, including reporting.
Underwriting practices. Selected Qualified Organizations shall utilize underwriting practices based upon the need of the Program’s target group (small and minority-owned businesses). Based on the intent of the Program, traditional underwriting practices may not address needs of this target group.

(b) Match Preferred. In selecting Qualified Organizations, preference shall be given to organizations that are able to match funding provided through the Program.

(c) The specific responsibilities and requirements of the Qualified Organization shall be contained within the contract executed by the selected organization and the Department.

(3) Reporting.

(a) Qualified Organizations. Each selected Qualified Organization shall provide a monthly written report to the Program Administrator as specified in the contract. The report may contain summary information on the amount of funds disbursed during the period, the amount of interest and principal repaid during the period, and the balance of the Program Fund’s loan with such organization. The report may also list the companies or individuals receiving loans with Program Funds along with, for each company, the original principal amount, the remaining principal owed, the monthly payment amount broken down into principal and interest, the current payment due date, the amount and date of the last payment, and such other information as the Program Administrator deems necessary. The report may also contain a listing, along with appropriate data, of companies or individuals that have principal or interest payments in arrears, as well as other comparable information that may be approved by the Department.

(b) Program Administrator. The Program Administrator shall provide a monthly written report to the Department, which summarizes the activities of each Qualified Organization, including totals for all organizations combined. Within such report, the Program Administrator shall identify any instances of non-compliance with Program requirements or contractual provisions. The Program Administrator shall report other information that may be requested by the Department.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006. Rule 1700-6-1-.11

Tenn. Comp. R. & Regs. 1700-06-01-.11 CRITERIA FOR LOANS TO QUALIFYING BUSINESSES

(1) When evaluating Applications for Loans, the Qualified Organizations shall follow prudent lending practices. The following additional criteria shall apply:

(a) Maximum Loan Amount. The maximum Loan amount shall be one hundred twenty-five thousand dollars ($125,000).

(b) Loan Interest Rate. The interest rate that may be charged on Loans made with Program Funds may be a fixed rate or a variable rate, provided that any such variable interest rate shall not exceed the maximum rate.

(c) Maximum Loan Interest Rate. The maximum interest rate that may be charged on Loans made with Program Funds is 2% over the “Prime Rate” as published in the Wall Street Journal on the day the Loan is made.

(d) Minimum Loan Interest Rate. The minimum interest rate that may be charged on Loans made with Program Funds is 2% below the “Prime Rate” as published in the Wall Street Journal on the day the Loan is made.

(e) Fees. Late charges, as permitted by Tennessee law, may be imposed. Other fees, including an Application fee, may be imposed provided such fees are not unreasonable.

(f) Term. The recommended repayment periods for Loans are as follows:

For equipment, the lesser of five (5) years or useful life;
For working capital, supplies, and inventory, three (3) years; and 3. For other business-related activity, the lesser of five (5) years or useful life.

(g) Collateral and Security. Both business and personal collateral may be taken as security for a Loan and may include real property, tangible personal property, accounts receivable, certificates of deposit, and other intangibles. However, to the extent possible, assets acquired with Loan proceeds shall be used to secure the Loan.

(h) Guaranty Agreement. Personal guarantees from all principal owners shall be obtained.

Principal owners are those who have a twenty percent (20%) or more ownership interest in the company.

(i) Change of Ownership. If at any time during the term of the Loan the Qualifying Business ceases to be used to provide services, or the Qualifying Business sells, ceases to own, assigns, transfers, or otherwise disposes of all or any part of the Qualifying Business, it is the responsibility of the Qualifying Business to notify the Qualified Organization prior to the change of ownership. The Qualified Organization shall take such action as it deems appropriate in accordance with provisions of the Loan documents.

(j) Title Insurance. The Qualified Organization may require the Applicant to provide a Loan Policy of Title Insurance (i) issued by a title insurance company, (ii) for an amount equal to the maximum principal amount of the Loan, (iii) insuring the Program, (iv) evidencing that on the date of closing, interests in the property on or in which the Qualifying Business is located, as well as any properties offered as collateral, are vested in the appropriate party, and (v) containing only standard exceptions and encumbrances approved by the Qualified Organization. The Qualified Organization may require the title insurance policy to be accompanied by a survey and title to the property and showing that there are no easements or May, 2007 (Revised)

Rule 1700-6-1-.11, continued encroachments upon or other matters pertaining to the property, except those deemed acceptable to the Qualified Organization. In Applications where the Qualifying Business is to be housed in a leased facility, the Qualified Organization may require the Applicant to provide a fully executed lease agreement.

(k) Insurance. The Qualified Organization may require the Applicant, owners, and/or key managers to obtain and assign to the Program life insurance in the amount of the Loan. The Qualified Organization may also require business interruption insurance, hazard and casualty insurance, flood insurance, homeowner’s insurance, and other appropriate forms of insurance.

(l) Appraisals. The Qualified Organization may require appraisals by qualified appraisers for each property offered as collateral for the Loan.

(m) Other. The Qualified Organization may require environmental audits as well as other documents at its reasonable discretion.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.12 CONFLICTS OF INTEREST

(a) Participation in the Program by any member of the Department, employees of a Qualified Organization or the Program Administrator staff shall be governed by the provisions of T.C.A. §12-4-101 et seq.

(b) No member of the Department, employees of a Qualified Organization or the Program Administrator staff shall be directly interested, as defined in T.C.A. § 12-4-101(a)(1), in any Qualifying Business for which the Qualified Organization is considering a Loan for the duration of his or her tenure.

(c) Any member of the Department, employees of a Qualified Organization or the Program Administrator staff who is indirectly interested, as defined in T.C.A. §12-4-101(b), in any Qualifying Business for which the Qualified Organization is considering a Loan must disclose such interest in writing to the Department and shall refrain from participation in any discussion or activity in connection with such Application for a Loan. This disclosure shall be set forth in the official records held by the Qualified Organization.

(d) Any violations of this Rule 1700-6-1-.12 shall be subject to the penalties specified in T.C.A. § 12-4-102.

History

Authority: T.C.A. §§65-5-113, 12-4-101, and 12-4-102.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Tenn. Comp. R. & Regs. 1700-06-01-.13 PROGRAM SERVICES

(1) The Program shall also provide Program Services in the form of technical assistance, education and consulting services to Qualifying Businesses that may or may not be making Application for Loans under the Program. Program Services shall include, but shall not be limited to, financial counseling, assistance with the packaging of loan proposals, developing strategies for improved cash flow management, implementing internal financial management systems, and strategic planning, conducting pertinent training workshops and seminars, certifying Qualifying Businesses and identifying procurement opportunities with state, federal, and local government systems.

Rule 1700-6-1-.13, continued (2) All providers of Program Services shall be selected on a competitive basis. Program service providers shall have a demonstrated record of providing assistance to small and minority-owned businesses.

(3) General training and educational services funded through the Program shall be coordinated by the Program Administrator. Annually, the Program Administrator shall develop and submit to the Department for approval a proposed training program that includes, but is not limited to, strategic planning, and conducting pertinent training workshops and seminars. The proposal, which may be modified by the Department, shall include the budget required to fund the training program.

Upon approval by the Department, the Program Administrator shall implement the program.

(4) Service provided to specific Qualifying Businesses. Upon the request (application) of a Qualifying Business, the Program Administrator may refer such business to an appropriate program service provider. The Program will only be liable for services rendered pursuant to a referral from the Program Administrator. Once services are delivered, the service provider will invoice the Program Administrator who will invoice the Program for payment. To the extent possible, Qualifying Businesses shall agree to repay not less than fifty percent (50%) of the cost for receiving Program Services. This cost may be funded through the Loan Program.

History

Authority: T.C.A. §§65-5-113.
Administrative History: Original rule filed June 30, 2006; effective October 27, 2006.

Chapter 1700-07-01 Access to Public Records of the Department of Treasury

Tenn. Comp. R. & Regs. 1700-07-01-.01 PURPOSE AND SCOPE

(1) The purpose of these rules is to provide procedures to allow access to records of the Tennessee Department of Treasury that are subject to the Tennessee Public Records Act, T.C.A. §§ 10-7-501 et seq., and are promulgated for the additional purpose of implementing and establishing fees to be charged for reproduction of records or for the development of records in a specific format.

(2) These rules apply to all public records of all divisions, boards, councils and the like within or attached to the Department of Treasury.

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Tenn. Comp. R. & Regs. 1700-07-01-.02 REQUESTS FOR ACCESS TO RECORDS

(1) Processing of Requests to View Public Records.

(a) An in-person request for access to public records shall be made during the regular business hours of the Department from 8:00 AM to 4:30 PM, Monday through Friday, except for holidays.

(b) All requests for access to public records of the Department made in-person, or by any other means, shall be directed to the Records Custodian, Tennessee Department of Treasury, 502 Deaderick Street, 10th Floor, Andrew Jackson State Office Building, Nashville, Tennessee 37243.

(c) All requests for access to the Department’s public records shall identify with reasonable specificity the record, set or system of records which is requested.

(d) Requests will be processed on a first-come, first-served basis; provided, that the State Treasurer, or the Treasurer’s designee, may at any time alter this provision when circumstances warrant.

(2) Prior Review and Assessment for Confidential, Privileged or Protected Material.

(a) Review, Assessment and Redaction for Access to Records.

Before providing access to the requested record, Department staff shall review the requested record or records as quickly as reasonably possible, consistent March, 2011 2 with the availability of appropriate staff and with regard to the scope of the records request, and make an assessment of the status of the records, the scope of the requested access, and the time required for a response.
Upon review, Department staff will redact any data or information prior to release of the record, or portion of the record, that it determines has, or may have, confidential, privileged or otherwise protected material in the record that is subject to the Tennessee Public Records Act.

(b) If the Department determines that none of the provisions of subparagraph (c) below apply and access can otherwise be provided immediately, it shall do so.

(c) If it appears from the Department’s review and assessment that access to the record, or the system of records, cannot be provided immediately because:

Additional time is required to locate and retrieve the records because the records are not stored on the site or cannot be located;
The record or records require redaction of confidential, privileged or otherwise protected material;
The record is subject to current use as part of an on-going investigation and cannot be provided without interrupting or jeopardizing the investigation and/or its timeliness;
A computer or computer system that contains the record is unable to be accessed, is undergoing maintenance or re-programming for any Departmental program purposes, and/or cannot be accessed without substantially interfering with the delivery of services to the public or without damage to the integrity, operability or functioning of any computer or computer system;
Production of the record or records will require development of a program or application to provide access to, or a readable format for access to, electronic or magnetic sources of the record or records; or 6. For any other reason, then the Department shall inform the requesting person of the assessment and the reasonable approximate time required in complying with the request and a summary of the basis for the assessment regarding access to the records.

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Tenn. Comp. R. & Regs. 1700-07-01-.03 REQUEST FOR REPRODUCTION OF RECORDS

(1) Processing of Requests for Copies of Public Records.

(a) An in-person request for copies of public records of the Department shall be made during the regular business hours of the Department from 8:00 AM to 4:30 PM, Monday through Friday, except for holidays.

(b) All requests for copies of public records of the Department made in-person, or by any other means, shall be directed to the Records Custodian, Tennessee Treasury Department, 502 Deaderick Street, 10th Floor, Andrew Jackson State Office Building, Nashville, Tennessee 37243.

March, 2011 3 (c) All requests for copies of the Department’s public records must be made in writing to the Records Custodian of the Tennessee Department of Treasury, and shall identify with reasonable specificity the record, set or system of records which is requested.

(d) Records requests will be processed on a first-come, first-served basis; provided, that the State Treasurer, or the Treasurer’s designee, may at any time alter this provision when circumstances warrant.

(2) Prior Review and Assessment for Confidential, Privileged or Protected Material.

(a) Review, Assessment and Redaction of Records for Copy Request.

Before reproducing copies of the requested record, the Department’s staff shall review as quickly as reasonably possible the requested records consistent with the availability of appropriate staff and with regard to the scope of the records request, and make an assessment of the status and scope of the copy request and the time and costs required to locate, retrieve, review, redact, and reproduce the records.
Upon review, Department staff will redact any data or information prior to release of the record, or portion of the record, that it determines has, or may have, confidential, privileged or otherwise protected material in the record that is subject to the Tennessee Public Records Act.

(b) If the Department determines that none of the provisions of subparagraph (c) apply and copies can otherwise be provided immediately, it shall do so.

(c) If it appears from the Department’s assessment that reproduction of the record, or the system of records, cannot be provided immediately because:

Additional time is required to locate and retrieve the records because the records are not stored on the site or cannot be located;
The record or records require redaction of confidential, privileged or otherwise protected material;
The record is subject to current use as part of an on-going investigation and cannot be provided without interrupting or jeopardizing the investigation and/or timeliness;
A computer or computer system that contains the record is unable to be accessed, is undergoing maintenance or re-programming for any Departmental program purposes, and/or cannot be reproduced without substantially interfering with the delivery of services to the public or without damage to the integrity, operability or functioning of any computer or computer system;
Reproduction of the record or records will require development of a program or application to provide copies, in a readable format from, electronic or magnetic sources of the record or records, or that the person or entity has requested copies of the record in a specific format, and that such program, application or format does not currently exist; or 6. For any other reason, then the Department shall inform the requesting person of the assessment and the reasonable approximate time required and costs March, 2011 4 involved in complying with the request and a summary of the basis for the assessment regarding the costs of reproducing the records.

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Tenn. Comp. R. & Regs. 1700-07-01-.04 FEES AND COSTS FOR REPRODUCTION OF RECORDS

Upon a request for records under Tennessee’s Public Records Act, T.C.A. § 10-7-501 et seq., the Department shall assess charges for the copying and labor based on the most current version of the Schedule of Reasonable Charges, issued by the Office of Open Records Counsel, available at http://www.comptroller.state.tn.us/openrecords/index.htm .

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011. 1700-07-01-05 PAYMENT FOR RECORDS. (1) Prior to copies being made, or prior to developing a specific format for the reproduction of records, payment in full must be made to the Department, unless the payment is waived pursuant to Rule 1700-07-01-.06 below. (2) Payment for the costs of reproducing records shall be made only by cashier’s check, money order, or other reliable means as determined by the Department. (3) The cashier’s check or money order shall be made payable to the Treasurer, State of Tennessee, and delivered to the Records Custodian. Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).

Tenn. Comp. R. & Regs. 1700-07-01-.06 WAIVER OF FEES

Should any charge assessed under these rules total ten dollars ($10.00) or less, the Department may waive the charge and provide the requested documents without payment. In addition, the State Treasurer or the Treasurer’s designee, may, in his or her sole discretion, provide copies of rules, policies, guidance documents, public reports, etc., without charge:

(1) for general public information or announcement purposes to applicants for, or recipients of, services from the Department’s programs, or to provide information to such persons or their representatives in response to case-specific situations;

(2) to legislative, judicial or administrative bodies or tribunals as part of providing general or specific information or clarification regarding the Department’s programs or activities or in response to a case-specific request relative to applicants for, or recipients of, services from the Department or its employees, or for any other purpose;

(3) to other state, county or local agencies, their investigative, administrative, enforcement, regulatory, audit or law enforcement agencies, or for any other purpose;

(4) to advocacy groups, as determined by the Department, for persons served by the Department, to provide information or clarification, regarding Department programs or activities involving the Department’s programs and policies;

(5) to federal law enforcement, audit, program, administrative or regulatory agencies, or for any other purpose, or March, 2011 5 (6) if necessary to comply with any provisions of federal or state laws, court orders, regulations or policy directives.

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Tenn. Comp. R. & Regs. 1700-07-01-.07 REDUCTION OF FEES

The Treasurer, or the Treasurer’s designee, may waive or reduce any part of the fees calculated under these rules upon a written determination that such waiver or reduction would be in the best interests of the public.

History

Authority: T.C.A. §§ 4-3-2401; 10-7-503 and 10-7-506; Tennessee Electric Power Board of Nashville, 979 S.W.2d 297 (Tenn. 1998); and Op. Tenn. Atty. Gen. 01-021 (Feb. 8, 2001).
Administrative History: Original rule filed October 1, 2010; effective March 31, 2011.

Chapter 1700-08-01 Achieving A Better Life Experience Program

Tenn. Comp. R. & Regs. 1700-08-01-.01 PURPOSE

The purpose of these rules is to establish and implement the Achieving a Better Life Experience (ABLE)

Act and to establish a qualified ABLE program as an agency and instrumentality of the state to assist an Eligible Individual in saving money to meet the Eligible Individual’s Qualified Disability Expenses. The intent of the program is to encourage and assist individuals and families to save private funds for the

purpose of supporting individuals with disabilities to maintain health, independence and quality of life.

History

Authority: T.C.A. § 71-4-802 and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016.

Tenn. Comp. R. & Regs. 1700-08-01-.02 DEFINITIONS

For the purposes of these rules the following definitions shall apply:

(1) “ABLE” means Achieving a Better Life Experience.

(2) “Act” means Chapter 470 of the 2015 Public Acts.

(3) “ABLE Account” means an account established by, owned by, and for the benefit of an Eligible Individual, who is also the Designated Beneficiary on the Account, and maintained under a Qualified ABLE Program for payment of the Eligible Individual’s Qualified Disability Expenses, as provided in the Act.

(4) “Code” means § 529A of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 529A, as amended, and all rules, regulations, notices, and interpretations released by the United States department of treasury, including the internal revenue service.

(5) “Contract” means a contract for an Eligible Individual’s participation in the State’s Qualified ABLE Program.

(6) “Contracting State” means a State without a Qualified ABLE Program that has entered into a contract with a State with a Qualified ABLE Program to provide residents of the Contracting State access to a Qualified ABLE Program.

(7) “Contribution” or “Contributions” means any payment directly allocated to an ABLE Account for the benefit of a Designated Beneficiary.

(8) “Contributor” means the Person or Persons contributing money to an ABLE Account.

(9) “Designated Beneficiary” means the Eligible Individual who has established and owns an ABLE Account, and for whose benefit the ABLE Account has been established.

(10) “Disability Certification” means a certification that the Eligible Individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, or is blind within the meaning of § 1614(a)(2) of the Social Security Act; and such blindness or disability occurred before the date on which the individual attained age twenty-six (26); and includes a copy of the Eligible Individual’s diagnosis relating to the individual’s relevant impairment or impairments, signed by a physician meeting the criteria of § 1861(r)(1) of the Social Security Act.

(11) “Distribution” means any payment from an ABLE Account, except for a Program-to-Program Transfer.

(12) “Eligible Individual” means an individual who is entitled to benefits based on blindness or disability under title II or XVI of the Social Security Act, and such blindness or disability occurred before the date on which the individual attained age twenty-six (26), or a Disability Certification with respect to such individual filed with the Secretary of the United States department of the treasury for such taxable year. The Eligible Individual is the ABLE Account owner and the Designated Beneficiary on the ABLE Account.

(13) “Excess Contribution” means the amount contributed to an ABLE Account during the taxable year of the Designated Beneficiary that exceeds the limit in effect under 26 U.S.C. § 2503(b) for the calendar year in which the taxable year of the Designated Beneficiary begins, unless such contribution is otherwise permitted by the Code.

(14) “Excess Aggregate Contribution” means the amount contributed to an ABLE Account during the taxable year of the Designated Beneficiary that causes the total amounts contributed since the establishment of the ABLE Account (or of an ABLE Account for the same Designated Beneficiary that was rolled into the current ABLE Account) to exceed the limit in effect under 26 U.S.C. § 529(b)(6).

(15) “Individualized Education Account or IEA” means an account created pursuant to T.C.A. §§ 49-10-1401 through 49-10-1406.

(16) “Legal Representative” means an individual who or entity that may neither have nor acquire any beneficial interest in an ABLE Account during the lifetime of the Designated Beneficiary, but can act on behalf of and for the benefit of a Designated Beneficiary for the purpose of establishing, maintaining, transacting, and terminating an ABLE Account. Not inconsistent with the Code, a legal representative shall include, but not be limited to, an individual or entity with a power of attorney, or parent or legal guardian.

(17) “Member of the Family” means a Designated Beneficiary’s sibling, whether by blood or by adoption, which includes a brother, sister, stepbrother, stepsister, half-brother, and halfsister.

(18) “Person” means an individual, association, corporation, trust, charitable organization, or other such entity.

(19) “Program-to-Program Transfer” means the direct transfer of the entire balance of an ABLE Account into an ABLE Account of the same designated beneficiary in which the transferor ABLE Account is closed upon completion of the transfer, or of part or all of the balance to an ABLE Account of another Eligible Individual who is a Member of the Family of the former Designated Beneficiary, without any intervening Distribution or deemed Distribution to the Designated Beneficiary.

(20) “Rollover” means a Contribution to an ABLE Account of a Designated Beneficiary (or of an Eligible Individual who is a Member of the Family of the Designated Beneficiary) of all or a portion of an amount withdrawn from the Designated Beneficiary’s ABLE Account, provided the Contribution is made within sixty (60) days of the date of the Distribution and, in the case of a Rollover to the Designated Beneficiary’s ABLE Account, no rollover has been made to an ABLE Account of the Designated Beneficiary within the prior twelve (12) months.

(21) “Qualified ABLE Program” or “Program” means the ABLE program that is a qualified program pursuant to and in compliance with the Code, and that is created pursuant to the Act.

(22) “Qualified Disability Expenses” means any expenses related to the Eligible Individual’s blindness or disability which are made for the benefit of an Eligible Individual who is the Designated Beneficiary. Qualified disability expenses include expenses for the following: education; housing; transportation; employment training and support; assistive technology and personal support services; health; prevention and wellness; financial management and administrative services; legal fees; expenses for oversight and monitoring; funeral and burial expenses; and other expenses approved pursuant to the Code.

(23) “Redemption Value” means the current cash value of an ABLE Account attributable to the sum of the principal invested, and the earnings or losses incurred thereon.

(24) “Refund” means the Redemption Value of the ABLE Account at the time the refund is made, minus any applicable fee charged by the State.

(25) “State” means the State of Tennessee.

(26) “Trustees” means state treasurer; the commissioner of finance and administration; the chair of the finance, ways and means committee of the Senate; and the chair of the finance, ways and means committee of the House of Representatives.

History

Authority: T.C.A. §§ 71-4-803; 71-4-804(b); 71-4-805; 71-4-806; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016. Amendments filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-08-01-.03 PROHIBITIONS

(1) No interest in the Program or a portion of the Program shall be used as security for a loan.

(2) No interest in an ABLE Account may be sold or exchanged.

History

Authority: T.C.A. §§ 71-4-805; 71-4-806; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016.

Tenn. Comp. R. & Regs. 1700-08-01-.04 ELIGIBILITY AND APPLICATION REQUIREMENTS

(1) Eligibility. In order for an Eligible Individual to participate in the Program as the owner of an ABLE Account, the Eligible Individual shall meet the following eligibility requirements by providing the following to the State:

(a) Proof that the Eligible Individual is a resident of the State or of a Contracting State as of the date of application to participate in the Program;

(b) Proof that he or she meets the definition of an Eligible Individual by providing:

A completed and signed certification, affidavit, attestation, verification or declaration indicating that he or she is an Eligible Individual;
A completed and signed authorization allowing the State to verify his or her status as an Eligible Individual; or 3. Documentation indicating that he or she is an Eligible Individual.

(c) A completed and signed application on a form prescribed by the State; and (d) Any other documentation or information required by the Code.

(2) Application. The Eligible Individual or the Eligible Individual’s Legal Representative shall provide the following to the State accompanying the Eligible Individual’s completed and signed application to participate in the Program:

(a) Proof that the Eligible Individual has a Legal Representative who/that has the authority to administer the Eligible Individual’s ABLE Account for the benefit of the Eligible Individual, to the extent that the Eligible Individual wishes to participate in the Program through a Legal Representative;

(b) A completed and signed certification, affidavit, attestation, verification or declaration signed under penalty of perjury indicating that the Eligible Individual has no other existing ABLE Account, other than an ABLE Account that will terminate with a Rollover or Program-to-Program Transfer into the new ABLE Account;

(c) Investment selection(s) made by the Eligible Individual or the Eligible Individual’s Legal Representative. At least one (1) investment option must be selected. If more than one (1) investment option is chosen by the Eligible Individual or the Eligible Individual’s Legal Representative, then the Eligible Individual or the Eligible Individual’s Legal Representative must allocate the Contribution among the chosen investment options; and (d) An initial Contribution of at least twenty-five dollars ($25.00). This initial minimum Contribution amount will also apply to the Contribution of IEA funds into an ABLE Account.

(3) Confirmation. If all of the requirements contained in the Code, the Act and this chapter are met to open an ABLE Account, the State shall send a confirmation of acceptance to the Eligible Individual and will credit the Eligible Individual’s ABLE Account with the amount of the initial Contribution made.

(4) Rejection. If an Eligible Individual fails to provide all of the information required in this rule within thirty (30) calendar days of the State’s receipt of the Eligible Individual’s application, the State Treasurer may reject the application and refund to the Eligible Individual or the Eligible Individual’s Legal Representative all Contributions made less any applicable fees.

Rejection of an application shall not preclude the Eligible Individual from enrolling in the Program in the future.

(5) Fraud. The State Treasurer may terminate an Eligible Individual’s Contract if the Eligible Individual or the Eligible Individual’s Legal Representative knowingly makes any false statement or falsifies or permits to be falsified any record or records of the Program. The amount of the refund to which the Designated Beneficiary is entitled shall be equal to the Redemption Value of the ABLE Account at the time the refund is made, minus any applicable fee charged by the State.

(6) Inactivity. If a period of ten (10) consecutive years passes with no Contributions having been made to the Designated Beneficiary’s ABLE Account, or with no correspondence from the Designated Beneficiary or the Designated Beneficiary’s Legal Representative, the State Treasurer shall report and deliver the amount of any refund payable under the Contract to the Tennessee Department of Treasury’s Unclaimed Property Division pursuant to title 66,

chapter 29, part 1. Prior to delivering the refund, the State Treasurer shall make reasonable efforts to locate the Designated Beneficiary or the Designated Beneficiary’s Legal Representative. The refund shall be equal to the Redemption Value of the ABLE Account at the time the refund is delivered, minus any applicable fee charged by the State. Upon payment of the refund to the State Treasurer, the State’s obligations under the Contract shall cease.

(7) Fees. The State Treasurer may charge fees to the Designated Beneficiary or collect fees from each ABLE Account for the administration of the Program or for transactions under the State’s Qualified ABLE Program.

(8) Separate Accounting. The State shall maintain a separate individual ABLE Account for each Contract, showing the name of the Designated Beneficiary and the Redemption Value of the ABLE Account, including any Distributions made from the ABLE Account.

History

Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016. Amendments filed December 4, 2018; effective March 4, 2019 (Withdrawal of amendment to rule 1700- 08-01-.04(1) filed and effective December 21, 2018.). 1700-08-01-05 CONTRIBUTIONS. (1) Who May Make Contributions. One (1) or more Persons may make Contributions for a taxable year into an ABLE Account for the benefit for a Designated Beneficiary who is also an Eligible Individual during that taxable year. The Designated Beneficiary shall be an Eligible Individual at the time the ABLE Account is established, at the time of any Contribution to the ABLE Account, and at the time of a Distribution from the ABLE Account for Qualified Disability Expenses. All Contributions made to a Designated Beneficiary’s ABLE Account are pooled and are subject to the terms and conditions of the Designated Beneficiary’s Contract. (2) How Contributions May be Made. All Contributions to an ABLE Account shall be made in cash and not in property, except for Program-to-Program Transfers. For the purposes of these rules, “cash” means United States dollars in the form of negotiable checks. Cash Contributions may be made in the form of a check, electronic transfer or similar methods acceptable to the State. The State will only accept Contributions in the form of travelers’ checks; starter checks; or money orders if required by a court order. Contributions may also be made through a Rollover; through a Program-to-Program Transfer; or as otherwise permitted by the Code. (3) Limit on Amount of Contributions. (a) Contributions made to a Designated Beneficiary’s ABLE Account shall not include Excess Contributions. The State shall return the Excess Contributions to the Contributor, including all net income attributable to that Excess Contribution. The State shall return the Excess Contribution to the Contributor on a last-in-first-out basis until the entire Excess Contribution, along with all net income attributable to the Excess Contribution has been returned. The State shall ensure that the returned Excess Contributions are received by the Contributor on or before the due date, including extensions, for the Designated Beneficiary’s federal income tax return for the taxable year in which the Excess Contribution was made. If an Excess Contribution and the net income attributable to the Excess Contribution are returned to a Contributor other than the Designated Beneficiary, the State shall notify the Designated Beneficiary of the Excess Contribution return at the same time the Excess Contribution is returned to the Contributor. For the purpose of the Contribution limitation contained in this subparagraph (a), Contributions do not include Rollovers or Program-to-Program Transfers. (b) Contributions made to a Designated Beneficiary’s ABLE Account contributed since the establishment of the ABLE Account shall not exceed the limitation in effect under 26 U.S.C. § 529(b)(6). The Contributions toward the limitation shall include Contributions to any prior ABLE Account maintained by any State or its agency or instrumentality for the same Designated Beneficiary or any prior Designated Beneficiary. The State shall not accept any Excess Aggregate Contributions, and shall return all Excess Aggregate Contributions to the Contributor on a last-in-first-out basis until the entire Excess Aggregate Contribution, along with the net income attributable to the Excess Aggregate Contribution has been returned. The State shall ensure that the returned Excess Aggregate Contributions are received by the Contributor on or before the due date, including, extensions, for the Designated Beneficiary’s federal income tax return for the taxable year in which the Excess Aggregate Contribution was made. If an Excess Aggregate Contribution and the net income attributable to the Excess Aggregate Contribution are returned to a Contributor other than the Designated Beneficiary, the State shall notify the Designated Beneficiary of the Excess Aggregate Contribution return at the same time the Excess Aggregate Contribution is returned to the Contributor. (4) Individualized Education Account Contributions into an ABLE Account. In the event that an Eligible Individual or an Eligible Individual’s Legal Representative contributes funds from the Eligible Individual’s IEA to the Eligible Individual’s ABLE Account, the contributed IEA funds shall only be used for the Eligible Individual’s educational expenses that constitute Qualified Disability Expenses. The limitation on using the Eligible Individual’s IEA funds for educational expenses only shall be in effect until the Eligible Individual reaches the age of thirty (30). If the IEA funds in an Eligible Individual’s ABLE Account have not been expended for educational expenses by the time the Eligible Individual reaches the age of thirty (30), then the unused IEA funds may be utilized by the Eligible Individual or the Eligible Individual’s Legal Representative for any of the Eligible Individual’s Qualified Disability Expenses. Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.

Tenn. Comp. R. & Regs. 1700-08-01-.06 DISTRIBUTIONS

(1) Request for Distribution. Any Distribution request shall be made through an online form, email, written communication or any similar means by the Designated Beneficiary or the Designated Beneficiary’s Legal Representative. Funds shall not be distributed from an ABLE Account until the tenth (10th) calendar day following the State’s receipt of the respective funds. The distributed funds will be sent to the Designated Beneficiary. The distributed funds may be sent to the Designated Beneficiary’s Legal Representative or directly to a third party should it be permitted by the State.

(2) Amount and Timing of Distributions. The Distribution amount will be equal to the amount requested, not to exceed the Redemption Value of the Beneficiary’s ABLE Account at the time the Distribution is processed. The Distribution amount will be paid within a maximum of sixty (60) calendar days after the State’s receipt of a written Distribution request.

(3) Types of Distributions.

(a) Distributions for Qualified Disability Expenses. The Designated Beneficiary or the Designated Beneficiary’s Legal Representative may direct a Distribution and payment to the Designated Beneficiary, the Designated Beneficiary’s Legal Representative or a third party as payment for a Qualified Disability Expense. The Designated Beneficiary or the Designated Beneficiary’s Legal Representative shall provide the documentation requested by the State to substantiate that the Distribution will be used for the payment of Qualified Disability Expenses.

(b) Distributions for Non-Qualified Disability Expenses. The Designated Beneficiary or the Designated Beneficiary’s Legal Representative may direct a Distribution and payment to a the Designated Beneficiary or the Designated Beneficiary’s Legal Representative provided that the funds have been on deposit in the ABLE Account for at least ten (10) calendar days and provided that there is at least one hundred dollars ($100.00) in the ABLE Account once the Distribution is made. The earnings portion of the Distribution made for non-Qualified Disability Expenses may be subject to federal taxation as prescribed under the Code.

(c) Death of a Designated Beneficiary. In the event of a Designated Beneficiary’s death, the State shall make any outstanding payments for Qualified Disability Expenses.

Subject to the outstanding payments and to the extent permitted by the Code:

The funds remaining in an ABLE Account not in excess of the amount equal to the total medical assistance paid for the Designated Beneficiary after the establishment of an ABLE Account, net of any premiums paid from the ABLE Account or paid by or on behalf of the Designated Beneficiary to a Medicaid Buy- In program under any state Medicaid plan established under title XIX of the Social Security Act, shall be distributed to such state upon filing a claim for payment by such state. In the event that the State does not receive a claim from a state Medicaid plan for reimbursement within thirty (30) days after the Designated Beneficiary’s death, then the State shall distribute the remaining funds in an ABLE Account after the payment of outstanding Qualified Disability Expenses, and after the expiration of the thirty (30) day period. Should the Code establish a period of time different from the thirty (30) day period established in these rules, in which the State must wait for the filing of a state Medicaid claim, then the State will use the time period established by the Code; and 2. The Designated Beneficiary’s Legal Representative, estate administrator, estate executor or next of kin may request a Distribution of any remaining moneys in the Designated Beneficiary’s ABLE Account remaining after outstanding payments for Qualified Disability Expenses and payments pursuant to subdivision (i) in this paragraph, or may request an Account and Contract termination. In the event that a Person does not request a Distribution of the remaining funds or request an Account or Contract termination, then the remaining funds shall be payable to the Tennessee Department of Treasury’s Unclaimed Property Division pursuant to title 66, chapter 29, part 1.

(d) Rollovers. Any Designated Beneficiary or Designated Beneficiary’s Legal Representative may request a Rollover. Any Rollover made pursuant to this rule shall be administered in accordance with the applicable Rollover provisions contained in the Code. Any Rollover made pursuant to this rule shall not exceed the Redemption Value of the Designated Beneficiary’s ABLE Account minus any applicable fees charged by the State. The Redemption Value of the ABLE Account shall be determined as of the date that the Rollover is made. The portion of the Rollover amount that constituted an investment into an ABLE Account from which the Distribution was made, shall be added to the investment portion in the recipient ABLE Account, and the earnings from the ABLE Account from which the Distribution was made shall be added the into the earnings of the recipient ABLE Account.

(e) Program-to-Program Transfers. Any Designated Beneficiary or Designated Beneficiary’s Legal Representative may request a Program-to-Program Transfer. The portion of the Program-to-Program Transfer amount that constituted an investment into an ABLE Account from which the Distribution was made, shall be added to the investment portion in the recipient ABLE Account, and the earnings from the ABLE Account from which the Distribution was made shall be added the into the earnings of the recipient ABLE Account.

(4) Individualized Education Account Distributions from an ABLE Account. An Eligible Individual or Eligible Individual’s Legal Representative may withdraw IEA funds from the Eligible Individual’s ABLE Account while the Eligible Individual is under the age of thirty (30); however, the Eligible Individual or Eligible Individual’s Legal Representative shall use the withdrawn funds only for the Eligible Individual’s educational expenses that constitute Qualified Disability Expenses. Either the Eligible Individual or the Eligible Individual’s Legal Representative shall indicate through a completed and signed certification, affidavit, attestation, verification or declaration that the withdrawn funds will only be used for the Eligible Individual’s educational expenses that constitute Qualified Disability Expenses. The Eligible Individual or Eligible Individual’s Legal Representative shall be responsible for maintaining and providing the documentation requested by the Tennessee Department of Education relative to the use of the IEA funds deposited in an ABLE Account, and shall be responsible for complying with the Tennessee Department of Education’s rules relative to the use of IEA funds deposited in an ABLE Account, if applicable. Any IEA funds remaining in an Eligible Individual’s ABLE Account after the Eligible Individual reaches the age of thirty (30), may be used by the Eligible Individual or the Eligible Individual’s Legal Representative for any Qualified Disability Expenses.

History

Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016. Amendments filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-08-01-.07 ACCOUNT MAINTENANCE

(1) Update ABLE Account Information. Any Designated Beneficiary or Designated Beneficiary’s Legal Representative may make changes and updates to the ABLE Account information as needed. These changes include updates to the following, including, but not limited to, addresses; legal name changes; phone numbers; email addresses and changes in the Designated Beneficiary’s Legal Representative. The requested changes shall be provided in writing to the State on a form prescribed by the State, either in hard copy or electronic form.

(2) ABLE Account Limitations.

(a) Except in the case of Rollovers or Program-to-Program Transfers, a Designated Beneficiary is limited to one (1) ABLE Account at a time, regardless of where the account is located. Except in the case of Rollovers and Program-to-Program Transfers, if an ABLE Account is established for a Designated Beneficiary who already has an ABLE Account in existence, the State shall not treat the additional account as an ABLE Account; however, as long as the State returns all Contributions (including all net income attributable to the Contribution) to the Person or Persons who/that made the Contribution, then the additional account will be treated as never having been established.

(b) The funds (contributions, earnings and funds distributed for housing expenses as defined by the Social Security Administration) in a Designated Beneficiary’s ABLE Account at any one time shall not exceed one hundred thousand dollars ($100,000.00) should the Designated Beneficiary participate in the Supplement Security Income program under title XVI of the Social Security Act.

(3) Change in Designated Beneficiary. A Designated Beneficiary may be changed on an ABLE Account and the transferred moneys will not be treated as a Distribution subject to federal taxation as long as the new Designated Beneficiary is an Eligible Individual within the taxable year that the change occurs and the new Designated Beneficiary is a Member of the Family of the former Designated Beneficiary. A change in the Designated Beneficiary of an ABLE Account shall only occur during the life of the Designated Beneficiary, and at the time of the change, the successor Designated Beneficiary must be an Eligible Individual.

(4) Eligible Individual Recertification. At the request of the State, each Designated Beneficiary shall recertify to the State that he or she meets the definition of an Eligible Individual. Each Designated Beneficiary or Designated Beneficiary’s Legal Representative shall promptly report any changes in the Designated Beneficiary’s status as an Eligible Individual. Should a Designated Beneficiary no longer meet the definition of an Eligible Individual at any time during which the Designated Beneficiary has an ABLE Account, the Designated Beneficiary shall maintain his or her status as an Eligible Individual until the end of the taxable year in which the change in the Designated Beneficiary’s condition occurred. On the first day of the subsequent taxable year in which the Designated Beneficiary does not meet the definition of an Eligible Individual, the State shall not accept additional contributions into the ABLE Account and the existing money in the ABLE Account shall not be used for qualified disability expenses. Should a Designated Beneficiary subsequently meet the definition of an Eligible Individual, the State shall accept contributions into the Designated Beneficiary’s ABLE Account and the existing funds in the ABLE Account can be used to pay for qualified disability expenses.

(5) Investment Direction. Any Designated Beneficiary or Designated Beneficiary’s Legal Representative may, directly or indirectly, direct the investment of any Contributions to the Program, or any earning thereon, no more than two (2) times in any calendar year.

History

Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016. Amendments filed December 4, 2018; effective March 4, 2019.

Tenn. Comp. R. & Regs. 1700-08-01-.08 ACCOUNT STATEMENTS

(1) The State shall provide Designated Beneficiaries participating in the State’s Qualified ABLE Program or the Designated Beneficiary’s Legal Representative with periodic ABLE Account statements that include, but are not limited to the following: Contribution amounts;

Distribution amounts; investments in the ABLE Account; total ABLE Account balance; and Redemption Value of the ABLE Account. The State shall also provide this information at the request of the Designated Beneficiary or the Designated Beneficiary’s Legal Representative.

History

Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016.

Tenn. Comp. R. & Regs. 1700-08-01-.09 ACCOUNT AND CONTRACT TERMINATION

(1) A Designated Beneficiary may terminate his or her ABLE Account and Contract or a Designated Beneficiary’s Legal Representative may terminate a Designated Beneficiary’s ABLE Account and Contract at any time and for any reason upon a written request submitted to the State. In response to a written request for termination, a Refund will be paid to the Designated Beneficiary, Designated Beneficiary’s Legal Representative or any other Person designated to receive a Refund under the Contract. The actual termination of the ABLE Account and Contract will not occur until all funds in the Designated Beneficiary’s ABLE Account have been refunded.

History

Authority: T.C.A. §§ 71-4-804(b); 71-4-805; 71-4-806; 71-4-807; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016.

Tenn. Comp. R. & Regs. 1700-08-01-.10 PROGRAM TERMINATION

(1) If the Trustees determine that the State’s Qualified ABLE Program is, for any reason, financially infeasible, or is not beneficial to the citizens of the State of Tennessee or the State itself, then the Trustees may suspend or terminate the Program immediately. Termination of the Program will result in a termination of all ABLE Accounts and Contracts, and generate a Refund to the Designated Beneficiary, the Designated Beneficiary’s Legal Representative or any other Person designated to receive a Refund under the Contract.

(2) Notwithstanding any other provision to the contrary, Refunds and other benefits payable under a Contract shall be deemed to be due and payable only to the extent that moneys are available to the credit of the State’s Qualified ABLE Program, and that the State, the Tennessee Department of Treasury, the State Treasurer or the State’s Qualified ABLE Program shall not be liable for any amount in excess of such sums.

(3) Should the State’s Qualified ABLE Program be terminated by the Trustees and the Program assets prove to be less than would be required to fully pay all obligations of the Program in full, the State Treasurer shall first defray all Program administrative expenses. The State Treasurer shall then reduce payments owed pursuant to a Contract, pro rata, to the degree necessary to bring the total disbursement of the State’s Qualified ABLE Program within the amount of the remaining funds.

History

Authority: T.C.A. §§ 71-4-805; 71-4-807; 71-4-811; and Chapter 470 of the 2015 Public Acts.
Administrative History: Original rule filed October 8, 2015; effective January 6, 2016.

Chapter 1700-09-01 Qualified Domestic Relations Orders

Tenn. Comp. R. & Regs. 1700-09-01-.01 PURPOSE

The rules in this chapter implement T.C.A. § 8-25-114.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.02 DEFINITIONS

In addition to the definitions contained in T.C.A. Title 8, Chapter 25, the following definitions are applicable to this chapter:

(1) Alternate payee means a former spouse of a deferred compensation program participant who is recognized by a qualified domestic relations order as having a right to receive all or a portion of the amount payable to a deferred compensation program participant.

(2) Deferred compensation program means the program through which the state of Tennessee administers deferred compensation plans authorized under T.C.A. Title 8, Chapter 25, Parts 1 and 3.

(3) Participant means any employee who has elected to participate in a deferred compensation plan administered by the state of Tennessee that is authorized under T.C.A. Title 8, Chapter 25, Parts 1 and 3; any former employee who has an account balance in a deferred compensation plan administered by the state of Tennessee that is authorized under T.C.A.

Title 8, Chapter 25, Parts 1 and 3; and any member of the Tennessee Consolidated Retirement System who participates in the hybrid plan authorized under T.C.A. Title 8,

Chapter 36, Part 9, through which the member’s defined contribution component consists of a deferred compensation plan administered by the state of Tennessee that is authorized under T.C.A. Title 8, Chapter 25, Part 3.

(4) Plan(s) mean the deferred compensation plan(s) in which an employee participates through the deferred compensation program.

(5) Qualified domestic relations order (“QDRO”) has the same meaning as provided in § 414(p) of the Internal Revenue Code of 1986, codified in 26 U.S.C. § 414(p); provided, that such order may only relate to the provision of marital property rights for the benefit of the former spouse of the deferred compensation program participant.

History

Authority: T.C.A. §§ 8-25-103(a), 8-25-104, 8-25-114, 8-25-301, 8-25-304, 8-36-903, and 8-36-916.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016. October, 2016 2

Tenn. Comp. R. & Regs. 1700-09-01-.03 SUBMISSION OF ORDERS

A person who wishes to have the deferred compensation program review a domestic relations order to determine whether it is a QDRO for the purpose of receiving a portion of a participant’s account shall submit a copy of the signed domestic relations order to the deferred compensation program. Such order may be, but is not required to be, on the form provided by the deferred compensation program. However, such order must contain all requirements prescribed by these rules. The copy shall show the seal by the clerk of the court that entered the order. If validity cannot be determined, the deferred compensation program may request a certified copy of an order. The deferred compensation program shall not make a final determination for orders not yet entered by the court.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.04 ADMINISTRATIVE EXPENSES

The deferred compensation program may assess the administrative expenses of processing a QDRO in order that the deferred compensation plans shall operate without cost to or contribution from the state.

Any such administrative expenses shall be assessed to the participant’s account unless the QDRO states that all or a portion of the administrative expenses should be deducted from amounts paid to the alternate payee.

History

Authority: T.C.A. §§ 8-25-104, 8-25-113, 8-25-114, and 8-25-309.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.05 DELEGATION TO THIRD PARTY ADMINISTRATOR

The deferred compensation program may, at its discretion, delegate the review and implementation of QDROs, including the collection of administrative expenses as authorized by T.C.A. §§ 8-25-104(c) and 8-25-113, to a third party administrator with which it has a contract for administrative services.

History

Authority: T.C.A. §§ 8-25-104, 8-25-113, 8-25-114, and 8-25-309.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.06 REQUIREMENTS FOR A VALID QDRO

The deferred compensation program will accept a court order as a valid QDRO that meets all of the following requirements:

(1) The order must create or recognize the right of an alternate payee to all or a portion of a participant’s account.

(2) The order must contain the name, current mailing address, date of birth, and social security number of the participant.

(3) The order must contain the name, current mailing address, date of birth, and social security number of the alternate payee.

(4) The order must contain the amount or percentage of the participant’s account, distribution, or payments to be paid by the plan to the alternate payee, or a description of how to calculate the amount or percentage.

(5) The order must contain the number of payments or the period of time to which the order applies if the participant is receiving periodic or annuity payments.

October, 2016 3 (6) If the participant receives lump sum payments in addition to periodic payments, the order must specify a separate proportion or fixed amount to be applied to the lump sum payments.

Otherwise the lump sum payments will not be divided.

(7) The order must include a specified distribution or payment that is of a type or form permitted under the plan.

(8) The order must not include a specified amount or duration of the payment to the alternate payee that is greater than that available to the participant under the plan.

(9) The order must not grant the alternate payee payment of any benefits that have already been awarded to another alternate payee under another order previously determined to be a QDRO.

(10) The order may specify an alternative method for the parties to verify their social security numbers to the deferred compensation program, if the court finds that omission of the numbers in the order is necessary to reduce the risk of identity theft. The order is not a QDRO if the deferred compensation program finds that the method of verification is insufficient for the purpose of payment of benefits or reporting of income for tax purposes.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.07 REVIEW OF ORDERS

The deferred compensation program will notify the participant and alternate payee when it receives a domestic relations order showing the official stamp of the court. If validity cannot be determined the deferred compensation program may request a certified copy of an order. The notice will explain the procedures for determining if the domestic relations order is qualified. Upon completion of review of the domestic relations order, the deferred compensation program shall notify the participant and alternate payee in writing of the determination.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.08 PAYMENT TO ALTERNATE PAYEE

(1) If approved as a QDRO, the alternate payee may receive his or her payment only as a direct payment, rollover, or transfer.

(2) Payment to an alternate payee as directed by a QDRO shall be made without regard to whether the participant is eligible for a distribution of benefits under the plan.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.

Tenn. Comp. R. & Regs. 1700-09-01-.09 ALTERNATE PAYEE’S INFORMATION

An alternate payee is responsible to report to the deferred compensation program in writing each change in his or her name and residence address.

History

Authority: T.C.A. §§ 8-25-104 and 8-25-114.
Administrative History: Original rule filed July 15, 2016; effective October 13, 2016.