(a) The provisions of this section are intended to meet the requirements of Internal Revenue Code, §529.     
      (b) A payment of an amount due to the fund for a prepaid tuition contract must be made in cash or cash equivalent. A person may not make a payment to the fund (regardless of whether such payment is a direct purchase, gift, contribution under the Texas Save & Match program, or other payment) to the extent that any such payment with respect to a beneficiary, when aggregated with the other Internal Revenue Code, 529 Plans for such beneficiary, would exceed the contribution limits of Internal Revenue Code, §529.     
      (c) The plan manager will monitor contributions to and withdrawals from the fund and any account within the fund to ensure that any applicable limits on contributions or withdrawals are not exceeded.     
      (d) The plan manager shall maintain a separate accounting for each beneficiary.     
      (e) The plan manager shall determine the earnings portion of each distribution, if any, in accordance with methods that are consistent with Internal Revenue Code, §529.     
      (f) The plan manager shall report the earnings portion of any distribution or refund on a statement to the purchaser or other distributee as appropriate, and to the Secretary of the United States Treasury, as may be required by the Internal Revenue Code, §529.     
      (g) The purchaser and beneficiary under the prepaid tuition contract, and any other contributor, may not:      
        (1) control or direct the investment of payments under the contract or any earnings of the fund; or       
        (2) use any interest in the contract as security or collateral for a loan or other obligation.       
      (h) The board and plan manager shall make such reports as the Secretary of the United States Treasury may require to maintain compliance with Internal Revenue Code, §529.     
      (i) Policies and procedures. As authorized under Education Code, Chapter 54, Subchapters F, G, and H, the board may adopt any policy or procedure, and such policy and procedure automatically amends each outstanding prepaid tuition contract, as necessary for:      
        (1) the prepaid tuition contract to obtain or maintain qualification as a qualified tuition program under Internal Revenue Code, §529;       
        (2) purchasers and beneficiaries to obtain and maintain the federal income tax benefits or favorable treatment that is provided by Internal Revenue Code, §529; or       
        (3) the prepaid tuition contract to obtain or maintain exemption from registration under federal securities law. If outstanding prepaid tuition contracts are automatically amended as a result of this rule, purchasers will be notified of the amendment through the Internet web site of the program.       
     Source Note:        The provisions of this §7.123 adopted to be effective August 27, 2008, 33 TexReg 6957