PROPOSED ORDER OF THE
DEPARTMENT OF FINANCIAL INSTITUTIONS,
COLLEGE SAVINGS PROGRAM, OFFICE OF FINANCIAL CAPABILITY
CREATING RULES
The Wisconsin Department of Financial Institutions – College Savings Program, proposes an order to repeal DFI-CSP 1.02 (19), 1.11 (4), 1.11 (1), and 1.13 (1) (c); and to amend DFI-CSP 1.01, 1.02 (1), (10), and (16), 1.09 (2) and (4), and 1.11 (1) of the Wisconsin Administrative Code, relating to eliminating obsolete provisions, correcting cross-references, eliminating rules that are redundant with statutes, correcting errors, and modifying the structure of existing rules in nonsubstantive ways.
The scope statement for this rule was approved by the Governor on January 4, 2024, published in Administrative Register No. 817A3 on January 16, 2024, and approved by the College Savings Program Board on March 21, 2024. ______________________________________________________________________________
ANALYSIS
1. Statutes interpreted:
2. Statutory authority:
3. Explanation of agency authority:
Pursuant to Wis. Stats., s. 224.50 (2) (e, the College Savings Program Board is authorized to “[p]romulgate rules to implement and administer” the program. Wis. Stat., s. 227.14 (1), requires agencies drafting administrative rules to “adhere substantially to the form and style used by the legislative reference bureau in the preparation of bill drafts and the form and style specified in the manual prepared by the legislative council staff and the legislative reference bureau under s. 227.15 (7),” while Wis. Stat. s. 227.29 (1) directs agencies to address rules that are unauthorized, obsolete or unnecessary, or duplicative of, superseded by, or in conflict with other applicable state or federal law. 4. Related statutes or rules:
Wisconsin law requires the College Savings Program Board to “ [e]nsure that the college savings program meets the requirements of a qualified state tuition plan under 26 USC 529,” to utilize section 529’s definitions of qualified or nonqualified withdrawals, and to conform to section 529 in other respects. See Wis. Stats., ss. 224.50 (2) (b), 224.50 (2) (e), 224.50 (2) (i), and 224.50 (3) (a) 3.
5. Plain language analysis:
The Department’s College Savings Program Board (Board) seeks to amend certain rules it administers in two nonsubstantive ways.
First, it seeks to repeal or modify certain provisions of chapter DFI-CSP 1 of the Wisconsin Administrative Code that have become obsolete or unauthorized due to changes in 26 U.S.C. 529, the federal law governing qualified tuition programs such as Wisconsin’s college savings program. For example, section DFI-CSP 1.01 describes the purpose of the program as enabling participants to invest funds “to pay the cost of attendance at an institution of higher education.” While that statement remains accurate in part—many Wisconsin families use the college savings program to help pay for college or other higher education—it has become incomplete. Amendments to federal and state tax law since the time DFI-CSP 1.01 was promulgated have established that college savings program funds may also be used for other purposes, including the costs of elementary or secondary school attendance, the costs of participating in certified apprenticeship programs, and rollover contributions to beneficiaries’ retirement accounts. The Board seeks to update this and similar references in its administrative rules to remove outdated language and more accurately reflect the full range of currently permissible uses of invested funds under applicable tax law. Second, the proposed revisions modify the structure of existing rules to conform to current Wisconsin drafting practices, which will provide greater clarity and consistency with the drafting style of other statutes and rules administered by the agency.
6. Summary of, and comparison with, existing or proposed federal regulation:
26 U.S.C. 529 is the federal tax statute governing qualified tuition programs such as Wisconsin’s college savings program. It establishes the requirements for state programs, permissible uses of funds by program participants, and penalties for impermissible uses. Wisconsin law requires the College Savings Program Board to “ [e]nsure that the college savings program meets the requirements of a qualified state tuition plan under 26 USC 529,” to utilize section 529’s definitions of qualified or nonqualified withdrawals, and to conform to section 529 in other respects. See Wis. Stats., ss. 224.50 (2) (b), 224.50 (2) (e), 224.50 (2) (i), and 224.50 (3) (a) 3.
7. Comparison with rules in adjacent states:
8. Summary of factual data and analytical methodologies:
The proposed changes are based on the experience of DFI staff and the College Savings Program Board in administering this program, pursuant to state law and 26 USC 529. The revisions foster compliance with existing statutory policies requiring the elimination of obsolete or unauthorized rules, correction of cross-reference errors, elimination of conflicts with current statutes, and modification of existing rules to ensure consistency with current drafting conventions.
9. Analysis and supporting documents used to determine effect on small business:
Small businesses are not affected by these revisions.
