{"data":{"id":"us-ky/krs-164a.350","jurisdiction":"us-ky","citation":"KRS 164A.350","heading":"Ownership of contributions and interest -- Cancellation of participation","body":"agreement -- Transfer of ownership rights -- Penalty on earnings refunded due\nto cancellation or nondistribution -- Exemption from creditor's execution.\nFor all purposes of Kentucky law, the following shall be applicable:\n(1) The trust shall exercise ownership of all contributions made under any participation\nagreement and all interest derived from the investment of the contributions made by\nthe participant up to the date of utilization for payment of educational costs for the\nbeneficiary. All contributions made under any participant agreement and interest\nderived from the investment of the contributions made by the participant shall be\ndeemed to be held in trust for the benefit of the beneficiary;\n(2) Any participant may cancel a participation agreement at any time, and terminate the\ntrust's ownership rights thereby created in whole or in part, by delivering an\ninstrument in writing signed and delivered to the program admin istrator or his\ndesignee. In the event the participation agreement is terminated in part, the trust\nshall retain ownership of all contributions made under the participation agreement\nnot previously expended for the qualified educational expenses of the ben eficiary\nand not returned to the participant. The participant shall retain a reversionary right\nto receive upon termination the actual market value of the participant's account at\nthe time of the cancellation, including interest, except that the participan t may be\nrequired to pay a penalty upon the interest that has been credited to the participant's\naccount in accordance with subsection (6) of this section;\n(3) The educational institution shall obtain ownership of the distributions made from\nthe participan t's account for the qualified educational expenses paid to the\ninstitution at the time each payment is made to the institution;\n(4) Any amounts received by the trust pursuant to the Kentucky Educational Savings\nPlan Trust which are not listed in this section shall be owned by the trust;\n(5) A participant may transfer the participant's rights to another eligible participant,\nincluding, but not limited to, a gift of the participant's rights to a minor beneficiary\npursuant to KRS Chapter 385, except that, notw ithstanding KRS 385.202(1), the\ntransfer shall be effected and the property distributed in accordance with\nadministrative regulations promulgated by the board or the terms of the\nparticipation agreement;\n(6) Notwithstanding any other law to the contrary, i f any earnings on contributions are\nrefunded due to cancellation of the participation agreement by the participant or\nnondistribution of the funds for payment of the beneficiary's qualified educational\nexpenses, the board may charge a penalty to the partic ipant against the earnings on\ncontributions. No penalty shall be charged when a refund is made due to:\n(a) The death, permanent disability, or mental incapacity of the beneficiary; or\n(b) The beneficiary's receipt of a scholarship, an educational assistanc e allowance\nunder Chapters 30, 31, 32, 34, or 35 of Title 38, United States Code, or a\npayment exempt from income taxation by any law of the United States, other\nthan a gift, bequest, devise, or inheritance within the meaning of Section\n102(a) of the Inter nal Revenue Code, 26 U.S.C. sec. 102(a), for educational\nexpenses, or attributable to attendance at an institution of higher education, to\nthe extent that the amount refunded does not exceed the amount of the\nscholarship, allowance, or payment; and\n(7) Notwithstanding any other provision of law to the contrary, contributions and\nearnings on contributions held by the trust shall be exempt from levy of execution,\nattachment, garnishment, distress for rent, or fee bill by a creditor of the participant\nor the b eneficiary. No interest of the participant or beneficiary in the trust shall be\npledged or otherwise encumbered as security for a debt.","path":["KRS Chapter 164A"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47981","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:51:19Z","sha256":"bc85b513547eb10745187b2b9dc40af851c387020bbf91d7effe1429889d6436","source_id":"us-ky","stale":false,"prev":"us-ky/krs-164a.345","next":"us-ky/krs-164a.355"},"notice":"GroundRules: Original legal text. Not legal advice."}