108OAG21 ( 2023 )

Gen. 21] 21
ABANDONED PROPERTY
STATUTORY INTERPRETATION – MARYLAND 529 – WHETHER
THE MARYLAND UNIFORM DISPOSITION OF ABANDONED
PROPERTY ACT APPLIES TO ACCOUNTS IN THE PROGRAMS
OFFERED BY MARYLAND 529
May 15, 2023
Geoffrey F. Newman
Board Chair, Maryland 529
Maryland 529 has asked whether the Maryland Uniform
Disposition of Abandoned Property Act (the “Abandoned Property
Act,” or the “Act”) applies to accounts in the three tax-advantaged
college and disability savings programs that Maryland 529 offers.
If the Act applies to the accounts, Maryland 529 has also asked for
guidance on how to comply with it.
In our opinion, although Maryland 529 has not been explicitly
exempted from the Act, the Act does not apply to Maryland 529
accounts. The Maryland 529 programs have tax advantages that
facilitate long-term savings. These tax advantages encourage
families to invest decades ahead of expected college or disability
expenses so that market appreciation might help them meet their
goals. The Act, in contrast, generally presumes property to be
abandoned if left dormant for three years. Application of the Act’s
mandates would tend to interrupt family savings plans prematurely,
trigger tax consequences and penalties that defy common sense,
and clash with language in Maryland 529’s enabling statutes that
seeks to safeguard account funds from diversion to other State uses.
For these reasons, we think the General Assembly did not intend
the Act to apply to the accounts when it enacted the enabling
statutes.
Given this conclusion, we need not offer guidance on how to
apply the Act to the accounts. We note, however, that the Act likely
does apply to sums payable on distribution checks that your agency
issues that draw against 529 account balances. Thus, if such sums
remain unclaimed for three years, Maryland 529 generally should
presume that they are abandoned under the Act. We also note that
Maryland 529 should consult the unclaimed property laws of other
states, as opposed to the Act, for unclaimed accounts, checks, or
other property that your agency holds for program participants with
out-of-state addresses.
22 [108 Op. Att’y
I
Background
A. Maryland 529
Maryland 529 offers three programs to help families save for
specific types of expenses.1 See Md. Code Ann., Educ. (“Educ.”)
§ 18-1902.1; Revised Fiscal & Policy Note, S.B. 959, 2023 Leg.,
Reg. Sess. at 6. Two of the programs are college savings plans: the
Maryland Senator Edward J. Kasemeyer Prepaid College Trust
(“Prepaid Trust” or “MPCT”), and the Maryland Senator Edward
J. Kasemeyer College Investment Plan (“Investment Plan” or
“MCIP”). The third program, called the Maryland Achieving a
Better Life Experience Program (“ABLE”), is for disability-related
expenses.2 Most states have similar programs. U.S. Gov’t
Accountability Off., GAO-13-64, Higher Education: A Small
Percentage of Families Save in 529 Plans 10 (2012); ABLE
National Resource Center, Map Tool, https://www.ablenrc.org/select
-a-state-program/ (last visited April 25, 2023).
The General Assembly established the programs to conform
to two sections of the Internal Revenue Code: section 529, which
authorizes federal tax benefits for investments in state college
savings programs; and section 529A, which authorizes similar
benefits for state ABLE programs. 26 U.S.C. §§ 529, 529A; see 87
Opinions of the Attorney General 137, 138 (2002) (discussing
origins of the college savings plans). For convenience, we refer to
all three Maryland 529 programs as “529 programs,” and the
accounts within them as “529 accounts,” even though ABLE is
technically a 529A program.
The three programs differ. As discussed in more detail later,
the Prepaid Trust has defined benefits (the payment of in-state
tuition), while the Investment Plan is a defined contribution
program—families elect how much to invest without committing
to a fixed education benefit. See 87 Opinions of the Attorney
General at 138-40. ABLE is also a defined contribution program,
but for disability instead of education expenses. Maryland 529,
Maryland ABLE Disclosure Statement, at 6-7 (Dec. 1, 2021)
1
Until 2016, Maryland 529 was called the College Savings Plans of
Maryland. 2016 Md. Laws, ch. 39.
2
A fourth program, the Maryland Broker-Dealer College Investment
Plan, has been authorized by statute since 2008 but never implemented.
Educ. § 18-19B-02(a); see Revised Fiscal & Policy Note, S.B. 959, 2023
Leg., Reg. Sess. at 8.
Gen. 21] 23
(“ABLE Discl.”), https://www.marylandable.org/assets/docs/mary
land-able-plan-disclosure-booklet.pdf.
All three programs, however, share a common element with
each other and with similar programs in other states: a package of
tax advantages and penalties designed to encourage people to save
early for college and disability expenses. See Fiscal & Policy Note,
H.B. 431, 2016 Leg., Reg. Sess., at 4 (“ABLE Fiscal Note”). The
primary advantage is tax-free investment growth. Earnings on
money invested through the programs are not subject to federal or
Maryland income taxes so long as they are spent as intended—that
is, on qualified educational expenses (in the case of the college
programs) or qualified disability expenses (in the case of ABLE).
Id. But if the investor withdraws funds from a 529 account and
does not use them for qualified expenses, federal and Maryland
income taxes generally apply, along with a ten percent federal tax
penalty. See 26 U.S.C. §§ 529(c)(3)(A) (cross-referencing 26
U.S.C. § 72), 529A(c); Maryland 529, MCIP Disclosure Statement,
at 2, 5 (2021-2022) (discussing the 10% “Distribution Tax”)
(“MCIP Discl.”), https://maryland529.com/Portals/0/Files/MCIP_
Disclosure_Statement.pdf. For federal tax purposes, the framework
has similar features to Roth Individual Retirement Accounts
(“IRAs”): investments consist of after-tax dollars that grow and
may be withdrawn tax-free so long as they go to the intended
purpose. The threat of penalties on top of taxes for non-qualified
withdrawals discourages people from straying from the purpose of
the savings plan. See generally Internal Revenue Service, Pub.
590-A, Contributions to Individual Retirement Arrangements
(IRAs) (2023) (“IRS Pub. 590-A”), https://www.irs.gov/pub/irs-
pdf/p590a.pdf.
Other Maryland and federal tax advantages for 529 accounts
supplement the possibility of tax-free earnings. Maryland offers an
annual State income deduction of up to $2,500 for contributions to
any of the 529 programs. Md. Code Ann., Tax-Gen. (“TG”) § 10-
208(n), (o), (v); ABLE Fiscal Note at 4. For State tax purposes,
then, annual contributions up to that amount consist of pre-tax
dollars that grow tax-free and may be withdrawn tax-free so long
as they ultimately go to qualified expenditures. Maryland
encourages people to frontload accounts by allowing them to carry
over annual contributions above $2,500 into subsequent tax years.
See TG § 10-208(n)(4), (o)(4), (v)(4). For example, a Maryland
taxpayer may contribute $25,000 to a 529 account and take the
24 [108 Op. Att’y
annual deduction over ten years. See id.3 The federal tax code also
encourages frontloading. Contributions are considered a gift to the
account beneficiary for federal tax purposes, but the code allows
people to contribute five times the annual federal gift tax
exclusion—currently $17,000 (or $85,000 when multiplied by
five)—to a college savings plan and average out the contribution
over the ensuing years to avoid gift tax consequences. 26 U.S.C.
§ 529(c)(2).4 These frontloading incentives encourage people to
maximize the tax-free earnings on an account by investing more
money earlier.
The three Maryland 529 programs share another fundamental
characteristic: fiduciary administration. In the enabling statutes for
the programs, the General Assembly mandated in various ways that
the State officials handling 529 assets must act only to further the
interests of program participants. An eleven-member body called
the Maryland 529 Board (the “Board”) currently oversees all three
programs. Educ. § 18-1904.5 Board members are fiduciaries
subject to bond requirements. Id. §§ 18-1907(a), 18-1908. In
addition, the Board, as authorized by the enabling statutes, has
3
For the Prepaid Trust, there is no limit to the number of years that a
contribution may be carried over. TG § 10-208(n)(4). For the
Investment Plan, the limit is ten additional, consecutive years beyond the
year of the contribution, meaning that a maximum of $27,500 may
ultimately be deducted for a frontloaded contribution. Id. § 10-
208(o)(4); MCIP Discl. at 5-6. For ABLE, the Maryland statute allows
ten years, TG § 10-208(v)(4), but federal law caps annual contributions
at the gift tax exclusion (currently $17,000) plus some additional
contributions if the beneficiary is working, 26 U.S.C. § 529A(b)(2)(B);
Internal Revenue Service, What’s New–Estate and Gift Tax at 6 (Dec.
20, 2022) (gift tax exclusion for 2023 is $17,000), https://www.irs.gov/
businesses/small-businesses-self-employed/whats-new-estate-and-gift-
tax#Form%20706%20Changes. These additional contributions are
capped at the lower of the beneficiary’s compensation for the current tax
year or an amount equal to the Federal Poverty Level for a one-person
household. 26 U.S.C. § 529A(b)(2)(B)(ii); see 2016 ABLE Fiscal Note
at 3-4.
4
This federal frontloading incentive does not apply fully to ABLE,
due to the annual contribution cap. See 26 U.S.C. § 529A(b)(2), (c)(2).
5
The Board consists of the Secretary of the Maryland Higher
Education Commission, the State Superintendent of Schools, the State
Treasurer, the State Comptroller, the Chancellor of the University
System of Maryland, the Secretary of Disabilities, and five members of
the public appointed by the Governor who “have significant experience
in finance, accounting, investment management, or other areas that can
be of assistance to the Board.” Educ. § 18-1904(c).
Gen. 21] 25
established each of the three 529 programs as a trust, with Board
members serving as the trustees. Id. §§ 18-1901(p), 18-19A-
03(e)(1)(ii), 18-19C-03(e)(1)(iv); see also, e.g., MCIP Discl. at 2
(describing the Board’s June 13, 2001 Declaration of Trust for
MCIP).6
The trust arrangement emphasizes that funds invested in each
program may be used “solely for the benefit” of the participants
and that “such funds will not and cannot . . . be diverted to other
purposes.” Letter from John K. Barry, Assistant Attorney General,
to Securities and Exchange Comm’n, 1998 WL 178457, at *13
(Apr. 15, 1998). In nearly all circumstances, Maryland 529 may
distribute funds from a 529 account only with the authorization of
the person who established the account. Educ. § 18-19C-04
(“Distributions shall be requested by the designated beneficiary
. . . .”); § 18-19A-04(b) (“Distributions shall be requested by the
account holder.”); § 18-1907(b)(1) (Board must manage MPCT
“solely in the interest of the participants”).7 Further, the enabling
statute for each program protects investments from diversion to
public uses by mandating that funds “may not be considered money
of the State and may not be deposited into the [State] Treasury.”
6
The General Assembly recently enacted legislation to abolish the
Board and transfer responsibility for administering the Maryland 529
savings programs to the State Treasurer, effective June 1, 2023. 2023
Md. Laws, ch. 113 §§ 1, 2, 13. Under the legislation, the Treasurer
succeeds the Board and assumes its fiduciary responsibilities with
respect to the savings programs. Id. §§ 1, 2. The legislation also phases
out the Prepaid Trust by prohibiting the creation of new accounts
beginning on June 1, 2023, and requires the Treasurer to establish a
process for reviewing claims against the Trust. Id. § 1. These measures
respond to complaints of mismanagement of the Prepaid Trust. See
Hearing on S.B. 959 Before the Budget and Taxation Committee, 2023
Leg., Reg. Sess., at 3 (Mar. 15, 2023) (written testimony of Treasurer
Dereck E. Davis) (noting “concerns that account holders have raised
about their earnings”). Although the legislation has significant
ramifications for the administration of the savings programs and for the
Prepaid Trust in particular, it does not bear upon your questions about
the Abandoned Property Act. In addition, because the relevant portions
of the legislation have yet to take effect, we continue to refer to the Board
in this opinion as the entity responsible for administering the savings
programs.
7
The disclosure booklets for each program make this point in more
detail. See, e.g., MCIP Discl. at 28 (“Only you (or the Custodian or other
legal agent, if applicable) can request a distribution, unless a valid court
order directs otherwise.”); MPCT Discl. at 23 (“[O]nly the Account
Holder can control the use and distribution of the benefits in an
account.”).
26 [108 Op. Att’y
Educ. § 18-1903(f) (referring to the Prepaid Trust); see also § 18-
19A-05(c) (asserting the same for the Investment Plan), § 18-19C-
05(c) (asserting the same for ABLE). In other words, an
investment toward education or disability expenses in a 529
program cannot “be captured by the State.” Letter from David S.
Iannucci, Deputy Chief of Staff to the Governor, to Sen. Barbara
A. Hoffman (Feb. 18, 1997), Bill File on S.B. 232, 1997 Leg., Reg.
Sess. (“Hoffman Letter”).
Across the three programs, as of mid-2022, Maryland 529 had
more than $9 billion under management for about 300,000
beneficiaries: $7.8 billion for 270,428 beneficiaries in the
Investment Plan; $1.1 billion for 27,683 beneficiaries in the
Prepaid Trust; and $50.5 million for 4,937 beneficiaries in ABLE,
by far the newest of the three programs. Maryland 529, 2022
Annual Report Summary, Cover Letter (Dec. 2022),
https://maryland529.com/Portals/0/Files/AnnualReports/2022/20
22_MD529_Annual%20Report%20Summary.pdf.
We discuss each of the three programs in more detail below.
1. The Maryland Prepaid College Trust
Established in 1997, the Prepaid Trust is the oldest of
Maryland’s 529 programs. 1997 Md. Laws, ch. 110. It “is
analogous to a defined benefit pension plan.” Revised Fiscal Note,
H.B. 11, 2000 Leg., Reg. Sess., at 5 (“MCIP Fiscal Note”).
Families pay in advance for in-state tuition years at public
institutions of higher education in Maryland (“Maryland public
colleges,” for short). Educ. § 18-1909(a), (c); see Maryland 529,
MPCT Disclosure Statement, at 3 (“MPCT Discl.”),
https://maryland529.com/Portals/0/Files/MPCT_Disclosure_State
ment.pdf. They may choose to buy tuition years at community
colleges, 4-year public colleges or universities, or a combination of
these. Educ. § 18-1909(a); MPCT Discl. at 6.
To make the purchase, a family agrees to pay a specified
amount into a Prepaid Trust account. Educ. § 18-1909(d). The
family can opt to make a lump-sum payment up front or to spread
the payment out over monthly or annual installments. MPCT
Discl. at 24-28; see Educ. § 18-1909(d)(1). Because the Board
invests the payments with the expectation that they will appreciate
over time, prepaid tuition years are marginally cheaper for younger
children with later projected college enrollment dates,
notwithstanding the Board’s expectation that college tuition will
rise about five percent annually. MPCT Discl. at 21, 25-28; see
Gen. 21] 27
Educ. § 18-1909(c). In exchange for the payment, the Board agrees
to pay a specified number of tuition years. Educ. § 18-1909(d)(10).
If the beneficiary opts to enroll in a private or out-of-state college
instead of a Maryland public college, the Prepaid Trust pays the
tuition there up to the value of the in-state tuition benefit that the
family purchased. MPCT Discl. at 8.
The enabling statute anticipates two types of participants for
each Prepaid Trust account: the account holder, often a parent, who
controls the account and makes the payments; and the beneficiary,
who is to receive the benefit but does not control the account.
Educ. § 18-1901(c), (m). These two individuals may in theory be
the same—i.e., someone may open an account for him or herself—
but the program framework contemplates that they will ordinarily
be different. See id.; MPCT Discl. at 3. Either the account holder
or the beneficiary must be a resident of Maryland or the District of
Columbia. Educ. § 18-1909(b). The account holder may request a
refund of the account payments, plus certain earnings attributable
to them, at any time. Educ. § 18-1910; MPCT Discl. at 11. In the
first three years after a prepaid account is opened, if a refund is
requested, Maryland 529 withholds fifty percent of the earnings as
a penalty. MPCT Discl. at 11.
As for the defined-benefit tuition payments, the account
holder may request them as early as three years after opening the
account, provided the beneficiary has reached their projected
college enrollment year. MPCT Discl. at 8-9. These benefits are
paid directly to the educational institutions, or to the beneficiary or
account holder, and must be used no later than ten years after the
beneficiary’s projected college enrollment date, plus the number of
tuition years purchased. MPCT Discl. at 10; see Educ. § 18-
1909(d)(9).8 At the expiration of this benefits period, unless the
Board grants a waiver, the Prepaid Trust’s obligation to pay tuition
benefits terminates, and the payments cease to accrue earnings.
MPCT Discl. at 12-13. The account holder may then request a
refund or rollover the account to another 529 program. Id. at 13.
Rollovers to other tax-advantaged college savings programs or to
ABLE programs are available at all other times too, although not
more than once per year and subject to some restrictions. Id. at 11.9
8
The Board extends this benefits period for time that the beneficiary
spends in active military service. Educ. § 18-1910(c)(2).
9
Rollovers to the tuition programs of other states are subject to a
penalty in the first three years, and rollovers to ABLE programs are
subject to the annual ABLE contribution cap. MPCT Discl. at 11.
28 [108 Op. Att’y
2. The Maryland College Investment Plan
Established in 2001, the Investment Plan offers tax-
advantaged accounts that resemble the defined-contribution
aspects of an IRA, but for education savings rather than retirement
savings. 87 Opinions of the Attorney General at 139-40.
Participants choose how much to invest in a range of portfolio
options, and their returns are “based on investment performance,
not tuition cost.” MCIP Fiscal Note at 5. Unlike the Prepaid Trust,
the Investment Plan is open for enrollment nationwide. Educ. § 18-
19A-04(a). Like the Prepaid Trust, the Investment Plan
distinguishes between account holders, who set up and control
accounts, and beneficiaries. Id. § 18-19A-01.
An account holder may apply Investment Plan distributions,
tax-free, to an array of “qualified higher education expenses”—not
only college tuition, but also room and board, books and supplies,
and up to $10,000 per year for elementary and secondary school
tuition. 26 U.S.C. § 529(e)(3); MCIP Discl. at 3-4. Neither State
nor federal law imposes any restrictions on when the account
holder may withdraw funds. MCIP Discl. at 28. There is no
waiting period to take distributions on the front end, and—unlike
with an IRA—no point at which distributions become mandatory
on the back end. Id.; see Internal Revenue Service, Pub. 590-B,
Distributions from Individual Retirement Arrangements (IRAs) at
7 (2023) (“IRS Pub. 590-B”), https://www.irs.gov/pub/irs-
pdf/p590b.pdf (discussing required minimum distributions from
IRAs). The account holder may change the beneficiary at any time,
apparently even after the original beneficiary’s death, and there are
no tax consequences so long as the new beneficiary is within the
same extended family (out to first cousins) as the original
beneficiary. 26 U.S.C. § 529(c)(3)(C)(ii); see MCIP Discl. at 3, 27.
As with the Prepaid Plan, the account holder may generally roll
funds over to other tax-advantaged college savings plans and
ABLE programs, subject to some restrictions. 26 U.S.C.
§ 529(c)(3)(C)(i), (iii); MCIP Discl. at 30.10
Beginning in 2024, account holders may also rollover funds from long-
term Prepaid Trust accounts to Roth IRA accounts with the same
beneficiary, subject to certain restrictions. Secure 2.0 Act of 2022, Pub.
L. 117-328, div. T, tit. 1, § 126, 136 Stat. 4459, 5316-318 (2022).
10
As with the Prepaid Trust, starting in 2024, Investment Plan
accounts may be rolled over to Roth IRAs in some circumstances. See
supra note 9.
Gen. 21] 29
3. Maryland ABLE
Established in 2016, two years after Congress authorized the
underlying federal tax advantages, Maryland ABLE seeks to
“[e]ncourage and assist individuals and families in saving private
funds to support individuals with disabilities to maintain health,
independence, and quality of life.” Educ. § 18-19C-02(b)(1); 2016
Md. Laws, ch. 39; Stephen Beck, Jr., Achieving a Better Life
Experience Act of 2014, Pub. L. 113-295, div. B, 128 Stat. 4056-
74 (2014). A person’s savings in the program do not affect
eligibility for State public benefits and will affect eligibility for
federal means-tested public benefits only when balances exceed
$100,000. See id. § 18-19C-02(b)(2); ABLE Discl. at 8, 20-23.
The concept is to facilitate savings that “will supplement, not
supplant, benefits.” Educ. § 18-19C-02(b)(1). ABLE accounts are
similar to Investment Plan accounts in that people choose how
much to invest across a set of portfolio options. ABLE Discl. at 7.
Although anyone may contribute to an ABLE account,
participants generally create accounts for themselves rather than on
behalf of others. Educ. § 18-1901(b); ABLE Discl. at 14. In other
words, unlike in the college savings plans, beneficiaries generally
control their own accounts—the account holder “is the . . .
beneficiary,” as the statute puts it.11 Educ. § 18-19C-01(d). A
person is only eligible to open an account if they have a serious
disability or blindness and such disability or blindness occurred
before age twenty-six. 26 U.S.C. § 529A(e) (describing qualifying
disabilities); Educ. § 18-19C-01(f).12 There is no State residency
requirement. See Educ. § 18-19C-04; ABLE Discl. at 33. Federal
law caps annual contributions per account holder at the level of the
gift tax exclusion, currently $17,000, plus the account holder’s
income up to the federal poverty level. 26 U.S.C. § 529A(b)(2)(B);
ABLE Discl. at 7. The qualified disability expenses for which the
account holder may take tax-free distributions encompass “any
expenses related to the eligible individual’s blindness or
11
In all three 529 programs, an authorized legal representative, such
as a guardian or person with power of attorney, may control the account
on the account holder’s behalf in some circumstances. ABLE Discl. at
1; MPCT Discl. at 3; MCIP Discl. at 6; see also S.B. 343, 2023 Leg.,
Reg. Sess. (enrolled) (providing that certain persons other than the
designated beneficiary may establish and operate an ABLE account on
behalf of the beneficiary, where the beneficiary is unable to do so
independently).
12
Starting in 2026, this age limit will increase to forty-six. Secure 2.0
Act of 2022, Pub. L. 117-328, div. T, tit. 1, § 124, 136 Stat. 4459, 5314
(2022).
30 [108 Op. Att’y
disability,” including those for education, housing, “health,
prevention and wellness,” and many others. 26 U.S.C. § 529A(e);
Educ. § 18-19C-01(h). The account holder may take distributions
or initiate rollovers to college savings programs at any time, subject
to periodic limits (e.g., one distribution per day). Educ. § 18-19C-
04(b); ABLE Discl. at 16, 39-40.
After the death of the account holder, ABLE funds may be
distributed tax-free to cover funeral and burial expenses. 26 U.S.C.
§ 529A(e)(5). At this juncture, federal law also allows any state to
obtain payment from the account for medical assistance that the
state paid for the account holder under its Medicaid program after
the account was established. 26 U.S.C. § 529A(f). Maryland,
however, prohibits its State agencies from seeking such recovery
from ABLE accounts, unless federal law requires otherwise. Educ.
§ 18-19C-10(b). Amounts in the account not subject to State
claims may go to the beneficiary’s estate or to another individual
eligible to hold an ABLE account. Id. § 18-19C-10(a).
B. Unclaimed Property Laws and Uniform Acts
Every state has a law regulating “unclaimed” property—that
is, property held by another for an owner who has left it unattended,
who is unknown to the holder, or who cannot be found. See
Uniform Law Commission, Revised Uniform Unclaimed Property
Act, Prefatory Note, at 1, 3 n.8 (2016) (“RUUPA”). Unclaimed
property can be a “drag on the economy,” Cerajeski v. Zoeller, 735
F.3d 577, 579 (7th Cir. 2013), and, if left unregulated, results in
windfalls to the banks and other people and entities who have the
good fortune to hold it, see Comptroller of Treasury v. PHH Corp.,
123 Md. App. 214, 218 (1998).
Most of the state laws that address this problem are based on
a series of uniform acts published by the Uniform Law
Commission (“ULC”).13 American Express Travel Related Servs.,
Inc., v. Sidamon-Eristoff, 669 F.3d 359, 365 (3d Cir. 2012);
RUUPA, Prefatory Note, at 1. In 1954, the ULC published the first
of these uniform acts, called the Uniform Disposition of Unclaimed
Property Act. RUUPA, Prefatory Note, at 1. Maryland’s Act
draws heavily from this first version, as discussed later. See infra
Part I.C. Revisions to the uniform act followed under various
names in 1966, 1981, 1995, and, most recently, in 2016. RUUPA,
Prefatory Note, at 1. The uniform acts have a dual purpose: first,
13
The ULC is “also known as the National Conference of
Commissioners on Uniform State Laws.” Uniform Law Comm’n,
https://www.uniformlaws.org/home (last visited April 25, 2023).
Gen. 21] 31
to protect property owners by creating a system for reuniting them
with their property; and second, to transfer the windfall of
unclaimed property to the state, so that it may be used for public
benefit when the owners cannot be found. Id. at 3; Uniform
Disposition of Unclaimed Property Act, Prefatory Note, at 2 (1954)
(“1954 Uniform Act”).
The uniform acts and the state unclaimed property laws based
upon them descend from the common law tradition of escheat,
under which the crown acquired title to the lands of a person who
died without heirs. Clymer v. Summit Bancorp, 171 N.J. 57, 62-63
(2002). But most unclaimed property laws do not, in fact, provide
for escheat. Commonwealth Edison Co. v. Vega, 174 F.3d 870, 872
(7th Cir. 1999); RUUPA, Prefatory Note, at 1. That is, under these
laws, the state does not acquire ownership of unclaimed property
but instead holds it as a custodian for the owner. Id. The owner
may claim it at any time; in most states, no limitations period
applies. Vega, 174 F.3d at 872 (noting that a state “does not acquire
title” but is “merely a custodian,” and “[t]he owner can reclaim his
property at any time”); RUUPA, Prefatory Note, at 2 (“The state
merely holds possession, indefinitely . . . .”); 1954 Uniform Act,
Prefatory Note, at 2 (“The state takes custody and remains the
custodian in perpetuity.”).
Until the owner claims the property, the state uses it. It sells
everything other than money and deposits the proceeds in the state
treasury, holding a certain threshold in reserve to pay claims. See,
e.g., Hall v. State, 908 N.W.2d 345, 351 (Minn. 2018); RUUPA
§ 701. A state’s possession of unclaimed property thus works like
a “loan to the state—in perpetuity if the owner never shows up to
claim it.” Vega, 174 F.3d at 872. Some authorities thus refer to
unclaimed property laws as “‘modern’ escheat statutes,” e.g.,
Employers Ins. of Wausau v. Smith, 154 Wis. 2d 199, 205 (1990)
or “custodial escheat” statutes, e.g., Sidamon-Eristoff, 669 F.3d at
365; Colo. Op. Att’y Gen. No. 2005-01, 2005 WL 4020083, at *3
(Apr. 13, 2005).
Strictly speaking, state laws based on the uniform acts focus
on the regulation of unclaimed rather than “abandoned” property.
See RUUPA, Prefatory Note, at 3 n.8 (distinguishing terms); cf.
§ 201 (referring to property that is “presumed abandoned”).
Abandoned property is a more specific concept that refers to the
“voluntary relinquishment or renunciation of a property right, or an
ownership vacuum resulting from the owner’s death without heirs
or a valid will.” Cerajeski, 735 F.3d at 581. Put differently,
abandoned property is a subset of unclaimed property. RUUPA,
32 [108 Op. Att’y
Prefatory Note, at 3 n.8 (“All abandoned property is also
unclaimed, but not all unclaimed property is abandoned.”).
Unclaimed property laws work by applying a presumption of
abandonment to property that goes unclaimed for a set number of
years known as a “dormancy period.” See Clymer, 171 N.J. at 59;
PHH Corp., 123 Md. App. at 218. For example, under the current
uniform act, traveler’s checks are presumed abandoned if left
unclaimed for a dormancy period of fifteen years. RUUPA
§ 201(1). Dormancy periods vary by property type. The 1954
uniform act set them at seven years for most types of personal
property, including bank accounts and sums payable on uncashed
checks. 1954 Uniform Act § 2(a), (c). These periods have become
shorter over time; they settled at three years under the 1995 uniform
act and remain at that length for most property types under the 2016
uniform act. RUUPA § 201 cmt. There are exceptions, such as for
wages (one year) or for the aforementioned traveler’s checks
(fifteen years). RUUPA § 201(1), (11).
Even after the dormancy period has run, the holder must
attempt to contact the owner before treating property as abandoned.
For example, in Maryland, the holder must in most circumstances
send a notice by first-class mail to the owner stating that, if the
owner does not respond within 30 days, the property “will be
considered abandoned.” Md. Code Ann., Com. Law (“CL”) § 17-
308.2. If that does not work, the holder must report and transfer
the property to the administrator of the State’s unclaimed property
fund. See Sidamon-Eristoff, 669 F.3d at 365. The State then
attempts to locate the owner, usually by publishing information
about the property in its custody. See, e.g., Immanuel v.
Comptroller of Maryland, 449 Md. 76, 82-83 (2016).
The ULC has updated its uniform acts over the years to
address new forms of tax-advantaged property. In 1981, it
fashioned a rule for IRAs providing that the dormancy period for
them would not be triggered until distributions from the account
became mandatory. Uniform Unclaimed Property Act § 12(b)
(1981).14 Distributions from IRAs become mandatory only beyond
14
Congress first authorized tax-advantaged IRAs in the Employee
Retirement Income Security Act (“ERISA”) of 1974, Mazzei v.
Commissioner of Internal Rev., 998 F.3d 1041, 1044 (9th Cir. 2021), and
first authorized 401(k) defined contribution retirement accounts in 1981,
see Edward A. Zelinsky, The Defined Contribution Paradigm, 114 Yale
L. J. 451, 489 (2004). Although individual tax-advantaged retirement
accounts apparently did exist in some limited forms before ERISA, see
Gen. 21] 33
the typical age for retirement. See IRS Pub. 590-B, at 7, 35 (noting
that, generally, minimum distributions become mandatory for
traditional IRAs by April 1 of the year following the year in which
the owner reaches age 72 and do not become mandatory for Roth
IRAs until after the owner’s death). As such, under the 1981
uniform act, these savings vehicles for retirement could not be
presumed abandoned before the typical age for retirement—i.e., the
age at which the intended use for the funds would typically arise—
not even if the owner left them to grow unattended in the meantime.
The uniform laws continue to treat IRAs and other retirement
accounts in essentially this fashion, with some added safeguards.
RUUPA § 202.15
The 2016 uniform act addresses 529 accounts. Stakeholders
debated the topic for years before publication, especially with
respect to college savings plans. One interest group recommended
exempting them entirely. Unclaimed Property Professionals
Organization, Recommendations to ULC, at 1, 25 (June 18, 2014)
(“UPPO Recommendations”). The Investment Company Institute,
which represents mutual funds and other investment funds, argued
id. at 471 (mentioning nonprofit employee accounts), the ULC did not
address such accounts in the uniform acts until the 1981 revision, see
Uniform Unclaimed Property Act § 12(b) (1981).
15
For employer-sponsored retirement plans such as 401(k) or pension
plans, courts have held that ERISA preempts state unclaimed property
laws to the extent that they require such plans to transfer assets to the
state. Vega, 174 F.3d at 873-74; Manufacturers Life Ins. Co. v. East Bay
Rest. and Tavern Ret. Plan, 57 F. Supp. 2d 921, 924-25 (N.D. Cal. 1999);
see also U.S. Dep’t of Labor, Advisory Opinion 1994-41A, 1994 WL
694828 (Dec. 7, 1994). But see RUUPA § 202 cmt (suggesting that these
rulings may apply only to employer pension plans, not defined
contribution plans such as 401(k) plans). Governmental retirement plans
raise different issues because, although employer-sponsored, they are not
subject to ERISA. E.g., Gualandi v. Adams, 385 F.3d. 236, 242 (2d Cir.
2004). Some states appear to use alternative mechanisms, rather than
their general systems for unclaimed property, to regulate unclaimed
funds in governmental retirement plans. See Or. Op. Att’y Gen. No.
6019, 1965 WL 98740, at *1-2 (Sept. 1, 1965) (concluding that Oregon’s
unclaimed property law did not apply to a state employees’ retirement
system governed by a more specific statutory mechanism for addressing
unclaimed funds in the system); see also Samuel Schaunaman et al.,
Unclaimed Property And Employee Benefits: What Businesses Need to
Know, 23 J. Multistate Tax’n 30, 32 (2013) (noting that some states allow
employee benefit plans to opt out of the abandoned property system by
providing in the plan documents for “a method for the treatment of the
account balance of the account holder, plan participant, or beneficiary
who cannot be located”).
34 [108 Op. Att’y
for a thirty-year dormancy period. National Association of
Unclaimed Property Administrators, Recommendations to ULC, at
B-3.12 (Oct. 29, 2014) (quoting recommendation). It considered
this period appropriate due to the “nature and purpose of such
accounts and the severe tax consequences and penalties that would
result from their premature escheatment.” Id. Finally, the National
Association of Unclaimed Property Administrators, which
represents the state agencies that enforce unclaimed property laws,
countered that such a long dormancy period would be “arbitrary
and [would] unnecessarily delay[] escheatment.” Id. It suggested
instead a rule under which accounts could not be presumed
abandoned before the beneficiary turned 26. RUUPA Reporter,
Compilation of Recommendations and Suggestions for Revision
Submitted by Stakeholders, at 23 (Undated).
In the end, the ULC mostly followed the proposal of the
Investment Company Institute. For college savings accounts, the
2016 uniform act uses a three-year dormancy period that does not
begin to run until thirty years after the account is opened. RUUPA
§ 203 cmt.16 The ULC explained that it had determined that college
savings accounts “may well be used by beneficiaries over a longer
period of time and that, as a consequence, a policy allowing for up
to thirty years before those accounts would be surrendered to the
states was prudent and favored consumers.” Id. As for ABLE
accounts, the 2016 uniform act exempts them entirely, RUUPA
§ 203, due to their “nature and purpose,” id. cmt.17
16
The dormancy period may also be triggered when distributions from
an account become mandatory under federal tax law, see RUUPA
§ 203(1), but that situation does not apply to 529 accounts. Compare 26
U.S.C. § 529(c)(3) (not requiring distributions within any time horizon),
with id. § 530(b)(1)(E) (generally requiring that Coverdell education
savings accounts be fully distributed 30 days after beneficiary turns 30).
17
Some states have enacted laws that follow these aspects of the
uniform act. See Uniform Law Comm’n, Map, https://www.uniformlaws
.org/committees/community-home?CommunityKey=4b7c796a-f158-47bc-b
5b1-f3f9a6e404fa (last visited April 28, 2023) (showing enactment of the
2016 revised act by ten states and the District of Columbia); e.g., Colo.
Rev. Stat. Ann. §§ 38-13-102(24)(c)(I), 38-13-203. A few other states
expressly address unclaimed 529 accounts in statutes that are not based
on the uniform act but that typically use similar approaches—essentially,
specialized rules under which the presumption of abandonment cannot
arise until after the point that a beneficiary would likely have intended to
use the benefits. E.g., La. Rev. Stat. § 9:154A(15)(a) (five-year dormancy
period cannot begin until beneficiary’s thirty-fifth birthday); Ala. Code
§§ 16-33C-7(c), 16-33C-11(a)(10) (presumption of abandonment applies
Gen. 21] 35
C. Maryland’s Abandoned Property Act
The General Assembly enacted the Abandoned Property Act
in 1966. 1966 Md. Laws, ch. 611.18 The Act drew heavily from,
and remains substantially based upon, the 1954 uniform act. See
PHH Corp., 123 Md. App. at 218. The General Assembly has, of
course, amended the statute over the years. To list a few examples,
it has (over time) shortened the dormancy period that applies to
most property types from fifteen years to the now-standard three
years. See 2002 Md. Laws, ch. 440. It added a subtitle about
property in federal custody. 1981 Md. Laws, ch. 752 (adding
subtitle 2, CL §§ 17-201 to 17-209). It also joined a minority of
states in enacting so-called “business to business” or “B2B”
exemptions, so that the Act does not cover many checks, credits, or
transactions between businesses. E.g., 1997 Md. Laws, ch. 732;
see CL § 17-101(m)(2)-(4) (current B2B exemptions); see
generally RUUPA, Prefatory Note, at 10. And last year, it
amended the provisions that govern bank accounts, other property
held by financial institutions, and stocks and dividends to provide
that such property is not presumed abandoned unless the holder
lacks a valid address for the owner. 2022 Md. Laws, ch. 648 (H.B.
305).
But many of the Act’s core provisions still hew closely to their
analogues from the 1954 uniform act, albeit with updated
dormancy periods. Compare, e.g., CL § 17-306 (property held by
fiduciaries), § 17-307 (property held by public entities), with 1954
Uniform Act §§ 7-8. The Act does not contain provisions
addressing retirement accounts, 529 accounts, or other types of tax-
advantaged property—although, as discussed later, the
Comptroller has issued a regulation on IRAs. COMAR
03.05.01.06; see infra Part II.A.5.
Like the laws of some other states, the Act uses the term
“abandoned property” in place of “unclaimed property.” CL § 17-
if property still unclaimed upon expiration of benefits period); cf. Fl. Stat.
Ann. § 1009.972(5) (if prepaid benefits remain unclaimed after
expiration of benefits period and an additional dormancy period, they
transfer to scholarship programs). We are not aware of any state statutes
that explicitly subject 529 plans to generally applicable dormancy
periods for non-tax advantaged property.
18
Until 1981, the Maryland Act had the same title as the uniform laws.
See 1981 Md. Laws, ch. 752 (amending what is now CL § 17-326 to
change the title of the act from the “Uniform Disposition of Unclaimed
Property Act” to the “Uniform Disposition of Abandoned Property
Act”).
36 [108 Op. Att’y
101(b)(2) (defining “abandoned property” to include property in
federal custody that “is classified as ‘unclaimed property’ under
federal law”).19 The Comptroller administers the Act and must
initiate the sale of property (other than money) received under it
within a year. Id. §§ 17-101(c), 17-316(a). The Act directs the
Comptroller to distribute the sale proceeds and other monies
received under the Act across specified funds in the State
Treasury—for example, $8,000,000 to the Maryland Legal
Services Corporation Fund; $14,000,000 to the Access to Counsel
in Evidence Special Fund in fiscal year 2024—with the remainder
going to the General Fund. CL § 17-317(a). The Comptroller must
reserve $50,000 to pay claims. Id.(a)(1)(ii).
II
Analysis
A. Whether the Abandoned Property Act Applies to 529
Accounts
The principal question here, whether the Abandoned Property
Act applies to 529 accounts in the Maryland programs, is one of
statutory interpretation that turns upon legislative intent. E.g.,
Immanuel, 449 Md. at 86. The “normal, plain meaning of the
language of the statute” is the chief indicator of the General
Assembly’s intent. Wheeling v. Selene Finance LP, 473 Md. 356,
376 (2021). If the statutory language is “clear and unambiguous,”
the interpretive inquiry generally ends there. Dejarnette v. State,
478 Md. 148, 162 (2022); Immanuel, 449 Md. at 86. If the statutory
language is ambiguous, however, we must consider other
indicators of legislative intent, including context, the purpose of the
statutes, the consequences of plausible interpretations, and
legislative history. Wheeling, 473 Md. at 377; Mayor & Town
Council of Oakland v. Mayor & Town Council of Mountain Lake
Park, 392 Md. 301, 316 (2006). The Maryland courts have also
explained that “an ambiguity may still exist” in statutory language
“even when the words of the statute are themselves ‘crystal clear,’”
if the statute’s “application in a given situation is not clear.” Blind
Indus. & Servs. of Maryland v. Maryland Dep’t of Gen. Servs., 371
Md. 221, 231-32 (2002). In other words, the “intrinsic meaning [of
statutory language] may be fairly clear, but its application to a
particular object or circumstance may be uncertain.” Id. at 232(quoting Gardner v. State, 344 Md. 642, 649 (1997)).
19
In this opinion, we use “unclaimed property” when referring
generally to the field of unclaimed property law and “abandoned
property” when referring to the Maryland Act.
Gen. 21] 37
Before applying these principles, we emphasize that this is a
novel question of law. Unclaimed property laws and 529 programs
coexist in nearly every state, and the policy question of how they
should fit together has prompted much debate. The uniform act’s
proposed thirty-year trigger period for college savings plans and
exemption for ABLE programs emerged from that debate. But we
know of no published court decision or administrative
determination that analyzes whether an unclaimed property law
that has not been updated to address 529 accounts nonetheless
applies to them. Some sources indicate that agencies in other states
have confronted the issue, see, e.g., UPPO Recommendations at 25
(describing determinations of Ohio and Connecticut agencies that
unclaimed property laws do not apply to 529 assets), but we have
not found published legal analysis explaining their decisions.20
In addressing this question, we are also mindful of this
novelty and of our obligation to hew to current State law while
leaving resolution of the burgeoning policy issue to the General
Assembly. See 77 Opinions of the Attorney General 188, 190
(1992); 76 Opinions of the Attorney General 3, 3 (1991).
Ultimately, as we will explain, we do not think the General
Assembly intended the Abandoned Property Act to apply to 529
accounts when it enacted the three 529 programs.
We start, as always, with the text of the statute. But, in our
opinion, the statutory text here does not resolve the question. To
be sure, several provisions of the Abandoned Property Act are
worded broadly enough to implicate college and disability savings
plans. Perhaps the most relevant provision is CL § 17-306, which
concerns property held by fiduciaries:
20
Disclosure documents for 529 programs, including Maryland’s
programs, often reference unclaimed property laws in general language
that does not, in our opinion, convey a clear conclusion about whether
the laws apply to the accounts. See MCIP Discl. at 29 (“Under certain
circumstances, if there has been no activity in your Account and we have
not been able to contact you for a period of at least three years, your
Account may be considered abandoned under State law.”); ABLE Discl.
at 43 (“Many states (including Maryland) have unclaimed property laws
or similar laws under which if certain statutory requirements are met,
funds in an account may be considered abandoned or unclaimed. Your
state may request that the Program transfer the funds in your ABLE
Account pursuant to such laws.”). The ABLE disclosure document does
state that impermissible contributions in excess of statutory caps will be
treated as abandoned property if not claimed by the contributor. ABLE
Discl. at 15. In any event, because your questions concern 529 accounts,
we do not address whether these moneys that are prohibited from
entering 529 accounts are subject to the Abandoned Property Act.
38 [108 Op. Att’y
All intangible personal property and any
income or increment on it, held in a fiduciary
capacity for the benefit of another person, is
presumed abandoned unless, within 3 years
after it becomes payable or distributable, the
owner has increased or decreased the
principal, accepted payment of principal or
income, corresponded in writing concerning
the property, or otherwise indicated an interest
as evidenced by a memorandum on file with
the fiduciary.
Investment accounts such as 529 accounts constitute “intangible
personal property” for purposes of the Abandoned Property Act.
See 1954 Uniform Act § 9 cmt. (explaining that “a wide variety of
items will be embraced under” a section applicable to intangible
personal property, including “money, stocks, bonds, certificates of
membership in corporations, securities, bills of exchange, deposits,
interest, dividends, income”). At first blush, then, it appears
plausible that this provision governs 529 accounts. The accounts
are, after all, “intangible personal property . . . held in a fiduciary
capacity” by the 529 Board for the benefit of account holders and
beneficiaries. CL § 17-306. Indeed, given that the fiduciary nature
of the Board’s oversight anchors the 529 programs, § 17-306
speaks to an essential feature of 529 accounts. See Educ. § 18-
1907(a) (labelling Board members as “fiduciaries”); supra Part I.A
(discussing fiduciary aspects of programs).
At least two other provisions of the Act are also worded
broadly enough to arguably apply to 529 accounts. Section 17-307
covers all intangible personal property held by public entities:
All intangible personal property held for the
owner by any court, public corporation, public
authority, or public officer of this State or any
political subdivision of it that has remained
unclaimed by the owner for more than 3 years
is presumed abandoned.
CL § 17-307. Even more broadly, the so-called “omnibus section”
of the Act purports to cover all types of intangible personal
property not covered by other sections:
All intangible personal property, not
otherwise covered by this title, including any
income or increment on it and deducting any
Gen. 21] 39
lawful charges, that is held or owing in the
ordinary course of the holder’s business and
has remained unclaimed by the owner for
more than 3 years after it became payable or
distributable, is presumed abandoned.
CL § 17-308(b); 1954 Uniform Act § 9 cmt. (explaining that the
omnibus section aims to cover “all other intangible personal
property not otherwise covered by the more specific provisions of
the Act”); see also CL § 17-101(i), (l) (defining “holder” to include
a “person” and defining “person” to include the State and its units).
Again, because 529 accounts constitute intangible personal
property, it appears plausible, on an initial read, that one of these
provisions could apply to the accounts.21
Despite their wide sweep, however, these provisions become
ambiguous when applied to the unique features of 529 accounts.
See Blind Indus. & Servs. of Maryland, 371 Md. at 231-32. As the
Court of Appeals—now called the Supreme Court of Maryland—
explained in a case concerning the interplay between the
Abandoned Property Act and the Public Information Act, statutory
language that appears clear on its face may become ambiguous
when read in conjunction with another statutory scheme, especially
when, as here, the relationship between the statutes is not “plainly
set out” in the text and where the acts do not “refer[] directly to
each other.” Immanuel, 449 Md. at 87; see also 107 Opinions of
the Attorney General 74, 86-87 (2022) (concluding that statutory
language that appeared clear in isolation became ambiguous upon
consideration of how it would interact with other laws governing
the same subject).
Indeed, our Office has also recognized that seemingly clear
language on the face of the Abandoned Property Act may require
additional scrutiny to resolve tensions with other statutes. More
specifically, in examining a question about unclaimed lottery
prizes, we quoted broad language in the Act that would have
appeared, on its face, to cover them. See Md. Op. Att’y Gen. No.
21
The broad wording of the Act’s fiduciary, public entities, and
omnibus provisions is a hallmark of unclaimed property laws. It is
common for one type of property to fall within the potential sweep of
various provisions. See, e.g., Cory v. Public Utilities Comm’n, 33 Cal.
3d 522, 526 (1983) (unclaimed telephone refunds could fall under either
of two provisions); Weisman v. Brunetti, 15 N.J. Tax 197, 200-01 (N.J.
App. 1995) (per curiam) (multiple provisions “possibly could apply” to
unclaimed rent refunds); In re Northeast Utilities, 479 F. Supp. 194, 198
(D. Conn. 1979) (similar for unclaimed shares in public utility).
40 [108 Op. Att’y
86-026, 1986 WL 289921, at *2 (Apr. 9, 1986) (unpublished). Yet
we ultimately concluded that the Act did not apply to unclaimed
prizes because a section of the State Government Article provided
that the State Lottery Agency should retain them to fund future
prizes. Id. To require the transfer of unclaimed lottery prizes to
the Comptroller under the Abandoned Property Act, we reasoned,
would have “utterly defeat[ed]” the more specific mandate in the
State Government Article. Id. at *2 n.4. In short, even when
language of the Abandoned Property Act may appear in isolation
to subject a particular type of property to its mandates, the
ambiguities that arise in application and in reading the Act together
with other statutes often require additional scrutiny. See 107
Opinions of the Attorney General at 86-87.
Here, there are at least three significant ambiguities that arise
when attempting to read the Abandoned Property Act in
conjunction with the statutes governing the 529 programs. First,
the Act’s provisions do not fit comfortably with the distinction
drawn in the college savings plans between account holders and
beneficiaries. Under the plain language of the Abandoned Property
Act, a Prepaid Trust or Investment Plan account’s owner—that is,
the person whose actions with respect to the account suffice to
forestall dormancy and, ultimately, a presumption of
abandonment—would be the account’s beneficiary. CL § 17-
101(k) (“‘Owner’ means . . . [i]n the case of a trust, a
beneficiary . . . .”). But, as we have seen, the beneficiary does not
interface with Maryland 529 or control the account; the account
holder does. See In re Olchowski, 485 Mass. 807, 816-17 (2020)
(reasoning that application of Massachusetts abandoned property
law to attorney trust accounts would “be the legal equivalent of
trying to fit a square peg into a round hole,” in part because the
statute would appear to treat the attorney rather than the client as
the “owner” of deposits).
One might seek an interpretive solution to this problem by
resorting to less specific language in the Abandoned Property Act’s
definition of owner that points toward the account holder instead
of the beneficiary. See CL § 17-101(k)(5) (defining “owner” to
include “[a]ny person who has a legal or equitable interest in
property subject to this title”). But see State v. Ghajari, 346 Md.
101, 116 (1997) (the specific prevails over the general in statutory
interpretation). Still, the poor fit is apparent. None of the
provisions of the Act that might govern 529 accounts speaks to the
distinction between account holders and beneficiaries. In contrast,
other provisions of the Act do acknowledge special layers of
ownership interests in specific types of intangible property, see,
Gen. 21] 41
e.g., CL § 17-302(b) (addressing the situation where “a person
other than the insured or annuitant is entitled to the funds” on an
insurance or annuity contract), and the unclaimed property laws of
other states that have been updated to apply to 529 accounts
specifically address the distinction between account holders and
beneficiaries, see, e.g., Ala. Code § 16-33C-7(c)22; see also
RUUPA § 102 cmt. (clarifying that “for bank accounts, brokerage
accounts, IRAs, and other similar property, the legal owner of the
account would take precedence over a named beneficiary who does
not yet have legal ownership of the account”).
Second, the text of the Abandoned Property Act provisions
does not map logically onto the tax-advantaged framework of the
three 529 programs, which allows funds to be used without penalty
only for education or disability expenses. Under the Abandoned
Property Act provisions that might arguably apply to 529 accounts,
intangible property is presumed abandoned if the owner takes no
action for three years with respect to funds that are available to him
or her. For example, the public entities provision states that
intangible property is presumed abandoned if it is “held for the
owner” by a public entity and “has remained unclaimed by the
owner for more than 3 years.” CL § 17-307. Similarly, under the
fiduciary and omnibus provisions, the presumption of
abandonment applies when the owner leaves property unattended
for three years after it becomes “payable or distributable.” CL
§§ 17-306, 17-308(b); see also § 17-308(c) (“Property is payable
or distributable for the purpose of this title notwithstanding the
owner’s failure to make demand or to present any instrument or
document required to receive payment.”).
These provisions are in tension with the nature of 529 account
distributions, which the account owner may initiate at any time but
which will be subject to tax penalties if the funds are not put toward
a qualifying education or disability expense. For example, if we
were to apply the fiduciary provision—which, on its face at least,
is perhaps the most likely to apply in this context—529 accounts
22
The statute reads: “A [prepaid] contract shall also specifically
provide that, if after ten years following the designated beneficiary’s
college entrance date or the actual entrance date of a designated
beneficiary who is an accelerated student, neither the [prepaid] contract
has been terminated nor the designated beneficiary’s rights under the
contract exercised, the [] board, after making reasonable effort to locate
the purchaser, shall presume the contract purchase amount unclaimed
and abandoned property, and thereafter administered in accordance with
the Alabama Uniform Disposition of Unclaimed Property Act . . . .” Ala.
Code § 16-33C-7(c) (emphases added).
42 [108 Op. Att’y
would appear to be “distributable” from the moment the account
owner places funds in them, because the 529 statutes allow the
account holder to initiate a “distribution” at any time. See
Merriam-Webster Dictionary, https://www.merriam-webster.com/
dictionary/distributable (last visited Sept. 23, 2022) (defining
“distributable” to mean “capable of being distributed”); supra Part
I.A (discussing 529 distribution rules).23 Yet unless the account
holder has already accrued qualifying expenses to apply the funds
against (i.e., unless the beneficiary has enrolled in a qualifying
school or accumulated disability expenses), generally the
distribution will be penalized.
In short, the text of the Act, read in isolation, would appear to
treat funds in 529 accounts as available to the account holder, and
thus subject to the generally applicable three-year dormancy
period, even when distribution of the funds would trigger tax
penalties. Whereas RUUPA and the unclaimed property laws of
many other states address this problem, the Maryland Act does not.
See RUUPA § 203 (dormancy period for 529 and other tax-
advantaged accounts begins to run thirty years after the account is
opened or “the date, if determinable by the holder” when
distributions become mandatory, whichever is earlier).
Third, the provisions of the 529 enabling statutes that seek to
protect 529 funds from the State add further ambiguity. As
mentioned earlier, each of the three enabling statutes contains a
provision that states as follows: “Money of the [program] may not
be considered money of the State and may not be deposited” into
the State Treasury. E.g., Educ. § 18-1903(f). Because the
Abandoned Property Act requires the Comptroller to liquidate
presumptively abandoned property and deposit the sale proceeds
into specified Treasury accounts within one year of receipt, CL
§§ 17-316, 17-317, there is again some tension between the Act’s
requirements and the 529 statutes.
To be sure, the language in the 529 statutes does not explicitly
exempt the accounts from the Abandoned Property Act, cf. Educ.
§ 18-1911 (exempting Prepaid Trust from the Insurance Article),
nor create a conflicting mechanism for dealing with unclaimed
accounts, cf. Md. Op. Att’y Gen. No. 86-026, 1986 WL 289921 at
*2 n.4. And even though the Comptroller deposits sale proceeds
into the State Treasury, the Comptroller has a custodial
23
As discussed later, we have considered whether the phrase “payable
or distributable” might reasonably be interpreted to trigger the dormancy
period for 529 accounts only after some threshold event, such as if the
account is terminated. We do not think so. See infra Part II.B.5.
Gen. 21] 43
responsibility to safeguard and return the value of presumptively
abandoned property to the owner upon demand. CL §§ 17-313, 17-
319. Still, the care that the enabling statutes take in seeking to wall
off 529 funds from the State Treasury reinforces the ambiguity
about whether the Legislature intended the Abandoned Property
Act to apply. See Immanuel, 449 Md. at 87 (finding the text of the
Abandoned Property Act ambiguous where it and another relevant
statute did “not plainly set out” their interplay and where “[n]either
of the acts refer[ed] directly to the other”).
Having found no “clear and unambiguous” answer in the
statutory text, we consider the surrounding context, the
consequences of potential interpretations, the purpose of the
relevant statutes, and the legislative history to determine whether
the General Assembly intended the Abandoned Property Act to
apply to 529 accounts. See Mayor & Town Council of Oakland,
392 Md. at 316. These considerations, in our view, establish that
the General Assembly did not so intend.
1. Context
Beginning with context, the Act’s three-year dormancy period
does not match the nature of the 529 programs. The tax advantages
of the programs—in particular the possibility of tax-free
earnings—incentivize (although do not require) people to invest
money far in advance of expected education and disability
expenses. See supra Part I.A. The programs also allow for
extended gaps between initial investment and benefits use. Prepaid
Trust accounts are available at birth, and the benefits period
extends until at least ten years after the beneficiary’s projected
college enrollment date. MPCT Discl. at 10, 25. ABLE accounts
are available at birth and are designed for people who by age 26
have disabilities or blindness; distributions, meanwhile, may be
used for qualifying expenses even after the beneficiary’s death.
ABLE Discl. at 3, 7. And Investment Plan accounts are available
even before a child’s birth—apparently by way of parents who
name themselves as initial beneficiaries before the birth. Maryland
529, New and Expectant Parents, https://maryland529.com/529-
Basics/For-Every-Saver/New-and-Expectant-Parents (last visited
May 2, 2023). The funds then remain available for education
expenses anytime during the child’s life and can be transferred to
relatives even after that. MCIP Discl. at 27-28.
In sum, the framework of each 529 program—the tax
advantages and the extended lifecycles for accounts—encourages
people to invest early to cover expenses that may not arise for
44 [108 Op. Att’y
decades. This framework clashes with the three-year dormancy
period in the relevant provisions of the Abandoned Property Act.
Under any of the provisions that might apply to 529 accounts,
Maryland 529 would be required to transfer the accounts to the
Comptroller after three years of inactivity if unable to contact the
owners.24 This inconsistency, in our view, suggests that the
General Assembly did not intend the Abandoned Property Act to
apply to the accounts. See Blind Indus. & Servs. of Maryland, 371
Md. at 236 (declining to give an ambiguous statute an interpretation
that would have “an adverse impact on the goals of” another
statute).
Granted, the tension between the nature of the 529 accounts
and the Abandoned Property Act does not amount to the type of
blatant statutory conflict that led us to conclude, in a prior opinion,
that the Act does not apply to lottery winnings. See Md. Op. Att’y
Gen. No. 86-026, 1986 WL 289921 at *2 n.4. Yet when
legislatures in other jurisdictions have intended unclaimed property
laws to apply to 529 accounts, they have tailored much longer
dormancy periods—typically, thirty years—to fit the long-term
nature of the accounts and thus avoid the clash that application of
the Maryland Act to 529 accounts would entail. See, e.g., Colo.
Rev. Stat. Ann. § 38-13-203 (following RUUPA 30-year dormancy
period).
2. Consequences
Application of the Abandoned Property Act to 529 accounts
would also have illogical consequences. Although property owners
may claim their abandoned property from the Comptroller at any
24
As already mentioned, unclaimed property laws generally require
the holder to attempt to notify the owner before transferring property to
an unclaimed property fund. See supra Part I.B. Under the provisions
of the Maryland Act that might apply to 529 accounts, the required notice
must be by first-class mail. CL § 17-308.2. This notice requirement,
while integral to the statutory scheme, is not a failsafe. See Hearing on
H.B. 882 Before the House Economic Matters Comm., 2020 Leg., Reg.
Sess., at 1-2 (Mar. 6, 2020) (written testimony of Del. Kerr, bill sponsor,
discussing instances where notice failed to prevent the transfer of
financial accounts that owners intended to leave undisturbed); see also
2022 Md. Laws, ch. 648 (H.B. 305) (addressing notice concerns by
amending the Abandoned Property Act provisions for banks and
financial organizations to provide that the dormancy period does not
begin unless the holder lacks a valid address for the owner); RUUPA
§§ 203, 501 (imposing notice-by-mail requirement but still using a
special 30-year trigger period for tax-advantaged college savings
accounts).
Gen. 21] 45
time, CL § 17-318, a 529 account holder who recovers funds from
the Comptroller following a transfer under the Act would often owe
income taxes and penalties on the earnings portion of the account,
26 U.S.C. § 529(c)(3)(A) (rendering distributions from college
savings plans for non-qualified expenses taxable unless an
exception applies); id. § 529A(c)(1)(A) (same for ABLE); cf. IRS
Rev. Rul. 18-17, 2018-25 I.R.B. 753 (treating transfers of IRA
assets to unclaimed property funds as “distributions” for purposes
of Internal Revenue Code reporting and withholding
requirements); IRS Rev. Rul. 20-24, 2020-45 I.R.B. 965 (similar
analysis for transfers from qualified retirement plans under 26
U.S.C. § 401(a)).
Account holders could avoid these negative tax consequences
only in narrow circumstances. For example, if by coincidence the
beneficiary happened to have qualifying education or disability
expenses in the relevant tax year, the account holder could count
those expenses against the recovered funds. See 26 U.S.C.
§ 529(c)(3)(B)(ii). Or, in the unlikely event that the account holder
recovers the funds within sixty days of the transfer to the
Comptroller, he or she could roll them over into a new 529 account
without suffering tax consequences. Id. § 529(c)(3)(C)(i).25
Otherwise, account holders or their beneficiaries would be left to
pay taxes and penalties on earnings from an account that they set
up specifically because its earnings were meant to be tax-free. See
id. § 529(c)(3).
25
In the case of retirement accounts, the IRS has issued guidance
permitting waivers of the sixty-day rollover deadline for funds that have
been distributed to a state unclaimed property administrator. IRS Rev.
Proc. 20-46, 2020-45 I.R.B. 995. The IRS has not made the same type
of waiver available for 529 accounts, and it is not clear that the IRS
would have authority to do so. Compare 26 U.S.C. § 408(d)(3)(I)
(authorizing the IRS to waive the deadline for individual retirement
accounts where the failure to do so “would be against equity or good
conscience”), with id. § 529(c)(3)(C)(i) (no waiver language for college
savings accounts), and § 529A(c) (same for ABLE accounts). But even
if the IRS were to authorize such a waiver in the future, the point would
remain that, under the tax laws as they existed when the General
Assembly created each of the 529 programs, application of the
Abandoned Property Act would have triggered illogical tax
consequences and would thus have constituted a result that the General
Assembly probably did not intend. Wheeling, 473 Md. at 376 (ultimate
goal of statutory interpretation is to “ascertain and effectuate the General
Assembly’s purpose and intent when it enacted the statute” (emphasis
added)).
46 [108 Op. Att’y
In addition, funds remaining after the tax bill could not be
restored to their original tax advantages, at least not fully. The
account would not enjoy tax-free appreciation during its period in
the Comptroller’s custody. And given that rollovers are
unavailable after 60 days, an account holder wishing to return the
funds to a 529 program would face obstacles—either a second
round of gift tax implications in the case of a college savings
program, or the strict annual cap on contributions (currently
$17,000, plus some income) that applies to ABLE.
The upshot is that, on top of the taxes and penalties on account
earnings, the transfer of a 529 account to the Comptroller would in
many cases cause irreparable damage to an account’s tax
advantages going forward. The prospect of such illogical
consequences again suggests, in our view, that the General
Assembly did not intend the Abandoned Property Act to apply. It
is “inconsistent with common sense,” State v. Fabritz, 276 Md.
416, 422 (1975), that someone who frontloads an account and
leaves it alone for years before the time for its intended use arises—
exactly the type of behavior that the 529 programs incentivize—
could face taxes, penalties, and the loss of the core tax advantages
of the account.
3. Legislative Purpose
The legislative purpose of the Abandoned Property Act and
of the 529 enabling statutes further supports the conclusion that the
Act does not apply to 529 accounts. Recall that unclaimed property
laws like Maryland’s have two main purposes: to protect owners’
interests by reuniting them with their unclaimed property, and,
failing that, to ensure that the benefit of unclaimed property runs to
the State rather than private actors. See supra Part I.B. Of these
two purposes, the first is paramount. See Cerajeski, 735 F.3d at
583 (“[U]nclaimed property acts are primarily designed not to
enrich the state directly but to return the unclaimed property to the
stream of commerce, and to protect property owners against what’s
known as lucrative silence.”) (cleaned up); Patronis v. United Ins.
Co. of America, 299 So.3d 1152, 1157 (Fl. Dist. Ct. App. 2020)
(“[U]nclaimed property laws are inherently remedial in nature and
generally understood as advancing a state’s strong interest in
protecting consumers . . . . Their raison d’être is principally to
safeguard the economic rights of consumers . . . .”). Thus,
unclaimed property laws must be interpreted to advance the
interests of consumers before the interests of the government.
Patronis, 299 So.3d at 1158; see 1954 Uniform Act, Prefatory
Gen. 21] 47
Note, at 2 (listing the protection of property owner interests as the
first policy purpose).
Given that the administrators of state unclaimed property
funds have unmatched expertise in reuniting owners and property,
broad construction and application of unclaimed property laws
usually comports with their paramount purpose of protecting
consumers. See Clymer, 171 N.J. at 67 (reasoning that unclaimed
property laws should be “given a liberal interpretation in favor of
the State”); Patronis, 299 So.3d at 1158 (“[T]he state is deemed the
preferred custodian of escheatable funds (versus private
companies) . . . .”); U.S. Gov’t Accountability Office, Report 19-
88, Retirement Accounts: Federal Action Needed to Clarify Tax
Treatment of Unclaimed 401(k) Plan Savings Transferred to States,
at 17 (Jan. 2019) (“GAO Unclaimed 401(k) Report”) (data showing
that unclaimed property administrators have considerable success
reuniting owners with retirement savings). But not in the case of
529 accounts under the Maryland Act. Interpreting the Act’s
generally applicable three-year dormancy period to govern these
tax-advantaged accounts would, as we have seen, disrupt long-term
savings plans and trigger negative tax consequences even for
people using the accounts exactly as intended. In other words,
application of the Act would not favor consumer interests and thus
would not align with the Act’s primary purpose.
The purpose of the 529 enabling statutes reinforces the point.
Unlike the Abandoned Property Act, the enabling statutes coalesce
around a single purpose: to make education and disability expenses
more affordable by providing for prepayment or tax-advantaged
savings. Each of the three statutes articulates this purpose
explicitly. Educ. § 18-1902 (Prepaid Trust seeks to “enhance the
accessibility and affordability of higher education”); § 18-19A-
02(b) (purpose of Investment Plan is to “allow contributions to an
investment account established for the purposes of meeting []
qualified higher education expenses”); § 18-19C-02(b)(1) (purpose
of ABLE program is to “[e]ncourage and assist individuals and
families in saving private funds to support individuals with
disabilities” and “[p]rovide secure funding for disability-related
expenses”).
The statutes guard this purpose in various ways: by imposing
fiduciary obligations on the Board and agency employees, § 18-
1907; prohibiting distributions except at the account holder’s
request, see infra Part II.B.1; and, of course, walling off the
programs’ funds from the State Treasury, e.g., Educ. § 18-19A-
05(c). In other words, the statutes aim not merely to help people
48 [108 Op. Att’y
meet the challenge of paying for education and disability expenses,
but also to safeguard this objective by ensuring that nobody but the
account holder may divert account funds to any other purpose. We
think it implausible that the General Assembly intended accounts
in programs created with such a unitary focus on long-term savings
for onerous expenses to be subject to a three-year dormancy period
capable of triggering a presumption of abandonment (with
resulting tax losses and impairments to the savings vehicle) long
before some account holders might reasonably intend to use funds.
See Blind Indus. & Servs. of Maryland, 371 Md. at 236 (declining
to interpret a statute in a manner that would produce consequences
in such “clear contradiction” of the spirit of the statute as to make
it “inconceivable that that could have been the Legislature’s
intent”).
4. Legislative History
Finally, the legislative history aligns with the view that the
Legislature did not intend the Abandoned Property Act to apply to
529 accounts. Although we have not identified any materials in the
legislative history that address this question directly, the history
confirms the General Assembly’s preoccupation with protecting
529 investments from diversion to other State uses. At the request
of a delegate, the Governor’s office proposed adding the
prohibition on Treasury deposits to the Prepaid Trust bill (the first
of the 529 enabling statutes) to “make it clear that the monies of
the program cannot be captured by the State.” Hoffman Letter.
The bill already contained language relevant to this concern—it
required the Board to manage assets “solely for purposes of” the
program and not to “use the assets for any other purpose of the
State.” S.B. 232, 1997 Leg., Reg. Sess. (First Reader). But the
General Assembly still adopted the amendment, 1997 Md. Laws,
ch. 110, and later included the same prohibition in the enabling
statutes for MCIP in 2000 and for ABLE in 2016. 2016 Md. Laws,
ch. 39; 2000 Md. Laws, ch. 494. In a similar vein, the General
Assembly built out the fiduciary provisions in the Prepaid Trust
bill: after the bill was introduced, the Senate added the language
that eventually became Educ. § 18-1907, imposing fiduciary
obligations on the Board and program employees, Amend. No.
889800/1, S.B. 232, 1997 Leg., Reg. Sess., at 5-7 (Senate Budget
and Taxation Comm.), and the House later supplemented these
amendments with bonding requirements for the program
fiduciaries. Amend. No. 084835/1, S.B. 232, 1997 Leg., Reg.
Sess., at 2-3 (House Appropriations Comm.).
Gen. 21] 49
All of these amendments evinced the same legislative concern
as the bills wound their way through the two chambers: everyone
wanted to reinforce that the Board and its employees must act for
the benefit of account holders and beneficiaries, and that the State
must not divert 529 investments to other uses. Although none of
the resulting statutory language speaks to unclaimed property
issues and we do not think that this history by itself would be
conclusive, the concern conveyed in the legislative history with
ensuring that 529 investments would not slip away to unintended
uses comports with the conclusion we draw from context,
consequences, and legislative purpose: the General Assembly
probably did not intend to require 529 accounts to transfer to the
Comptroller, incur tax losses, and lose tax advantages under the
application of a three-year dormancy period.
5. Other Considerations
In reaching this conclusion, we have considered whether the
Act might reasonably be interpreted to apply to 529 accounts only
at a stage that would fit more appropriately with their nature as tax-
advantaged, long-term savings plans—for example, in the case of
a college savings plan, after the beneficiary reaches a typical age
for enrolling in college. See Immanuel, 449 Md. at 87 (“[I]f two
acts can reasonably be construed together, so as to give effect to
both, such a construction is preferred, and the two should be
construed together to be interpreted consistently with their general
objectives and scope.”).
For some retirement accounts established pursuant to 26
U.S.C. § 401(a) and 26 U.S.C. § 408(a), including but not limited
to IRAs and IRA-based Self-Employed Retirement Accounts
(known as “Keogh” accounts), the Comptroller has fashioned such
a harmonizing rule by regulation. COMAR 03.05.01.06. The
regulation mimics the rule for IRAs from the 1981 uniform law:
under it, such accounts may not be presumed abandoned until they
reach the stage that distributions from them become mandatory,
which means after retirement age. Id.; see supra Part I.B
(discussing 1981 uniform act). As such, transfers under the
regulation do not disrupt retirement savings plans prematurely and
do not trigger negative tax consequences. Neither the regulation
nor its history indicates which provision of the Abandoned
Property Act the Comptroller determined applied to the retirement
accounts. But given the regulation’s focus on mandatory
distributions, we assume it rests upon an interpretation of the term
“distributable” in the fiduciary section. See CL § 17-306
(presumption of abandonment arises “3 years after [property]
50 [108 Op. Att’y
becomes payable or distributable”); see also Uniform Unclaimed
Property Act § 12(b) (1981) (adding IRA rule to the fiduciary
provision).
In our view, however, the Act does not leave room for an
analogous interpretation with respect to 529 accounts. Unlike tax-
advantaged retirement accounts, 529 accounts do not have
withdrawal deadlines. There are no required minimum
distributions. See 26 U.S.C. §§ 529(c)(3), 529A(c)(1). Even where
an account reaches some threshold event—such as the death of the
beneficiary, or the expiration of the benefits period for a Prepaid
Trust account (ten years beyond the projected enrollment date, plus
the number of tuition years purchased)—generally the funds may
be rolled over into another program or transferred to another
beneficiary and retain their tax advantages. See MPCT Discl. at
12-13. The tax advantages do not expire as they do in the
retirement context. So we cannot harmonize the 529 programs with
the Abandoned Property Act by concluding that the Act applies
only at the juncture that an account must be drawn down, because
for 529 accounts there is no such juncture. Nor would it be
plausible to interpret the Act to apply only at the point that account
holders may withdrawal funds without penalty for qualifying
expenses of the beneficiary: unlike retirement account custodians,
who know when the owner reaches the age at which tax-
advantaged funds become available without penalty, Maryland 529
does not know when an account beneficiary enrolls in a qualifying
educational institution or incurs qualifying disability expenses.
Of course, the Legislature might conclude for policy reasons
that the expiration of the benefits period for a Prepaid Trust
account, or some other event for accounts in any of the 529
programs, should trigger a dormancy period under the Act. See
Ala. Code § 16-33C-7(c) (providing that presumption of
abandonment applies to unclaimed prepaid accounts ten years after
the beneficiary’s college entrance date); supra note 17 (discussing
other states’ bespoke statutory solutions for applying unclaimed
property laws to 529 accounts). But, in our view, the statute in its
current form cannot reasonably be interpreted to mandate such a
tailor-made approach to 529 accounts. Compare CL §§ 17-306.
17-307, 17-308(b) (providing for three-year dormancy periods
generally triggered by the availability of funds to the owner), with
RUUPA § 203 (fashioning a unique thirty-year dormancy trigger
for 529 accounts).
We recognize that our view of the Abandoned Property Act’s
inapplicability to 529 accounts may have policy drawbacks. Like
Gen. 21] 51
any type of financial account, some participants will inevitably
forget about their 529 accounts and leave them unclaimed. See
GAO Unclaimed 401(k) Report, Summary (noting that $35 million
in unclaimed retirement savings was transferred to states in 2016).
If the Act is inapplicable, the Comptroller’s expertise in reuniting
such funds with their owners will not come to bear. Moreover, if
these funds remain unclaimed, the financial windfall that they
represent will not transfer to the State and will not flow to the
purposes that the General Assembly has designated for unclaimed
property. 26
We reiterate, as we have on prior occasions when called upon
to interpret the Abandoned Property Act, that “[o]ur conclusion
about current law is not intended to address the[se] underlying
policy issue[s].” 77 Opinions of the Attorney General at 190.
Maryland, unlike some other states, has not enacted a statute that
speaks to how to balance the long-term, tax-advantaged nature of
529 accounts against the benefits of regulating unclaimed property.
Our view of current law, as we have explained, is that the General
Assembly did not intend the Act to govern, because application of
its three-year dormancy period to long-term 529 accounts would
clash with the context and purpose of the 529 enabling statutes and
would trigger tax losses and other consequences that defy common
sense.
B. Other Unclaimed Property Issues
The conclusion that the Abandoned Property Act does not
apply to 529 accounts makes it unnecessary to address your
agency’s second question, which seeks guidance on how to apply
the Act’s requirements to the accounts. But the Maryland Act and
the unclaimed property laws of other states still impose some
requirements on Maryland 529. For clarity and completeness, we
address these requirements below.
26
As we understand the 529 programs’ finances, the financial
windfall of abandoned Prepaid Trust accounts will go to other account
holders, because the funds will maintain the corpus of the trust that
ultimately goes to pay out defined benefits. See Vega, 174 F.3d at 872(explaining that unclaimed funds in a defined benefit retirement plan
would be available to pay out benefits to other participants if not subject
to unclaimed property laws). In the case of MCIP and ABLE, for which
Maryland 529 and outside administrators split fees, some of the financial
windfall will remain with Maryland 529 and some will go to the outside
administrators.
52 [108 Op. Att’y
1. Uncashed Distribution Checks
Your agency’s opinion request does not mention uncashed
distribution checks, but we understand that Maryland 529’s
questions about complying with the Act arise in part from issues
related to them. See Office of Legislative Audits, Maryland 529
Audit Report at 21-22 (Dec. 2019) (“2019 OLA Audit Report”)
(noting “uncashed checks totaling approximately $1.7 million that
were more than three years old”). Whether the Act applies to these
uncashed checks is less clear than whether it applies to the 529
accounts. But, although not entirely clear, it is our view that, even
though the Act does not apply to 529 accounts themselves, it likely
does apply to sums payable on distribution checks that your agency
issues (or, perhaps more accurately, that are issued on your
agency’s behalf) that draw against 529 account balances.27
As an initial matter, sums payable on outstanding checks are
clearly “intangible personal property” of the check’s payee within
the meaning of unclaimed property laws. E.g., Division of
Unclaimed Prop. v. McKay Dee Credit Union, 958 P.2d 234, 237
n.4 (Utah 1998); Revenue Cabinet v. Blue Cross and Blue Shield of
Kentucky, Inc., 702 S.W.2d 433, 434-35 (Ky. 1986). A check is
evidence of the payee’s right to be paid a specified amount. Blue
Cross of N. Cal. v. Cory, 120 Cal. App. 3d 723, 736 (1981). This
right to be paid, referred to as a “chose in action” in the early
uniform acts, is what constitutes intangible property. Id. at 735-36;
1954 Uniform Act § 1(f) (defining “owner” to be the “creditor,
claimant, or payee” in the case of “other choses in action” aside
from deposits and trusts); see Chose, Black’s Law Dictionary (11th
ed. 2019) (defining “chose in action,” in relevant part, as “[a]
proprietary right in personam, such as a debt owed by another
person”).
27
It is our understanding that, although Maryland 529 formerly issued
some distribution checks in-house, id. at 16, outside program managers
now manage the issuance of all distribution checks on its behalf. Sample
distribution checks that we have reviewed make clear that Maryland
529—and not the outside program manager—is liable for the sums
payable on the checks. As such, Maryland 529 is the “holder” of the
sums payable on the checks for purposes of the Act, notwithstanding the
involvement of the outside manager. See CL § 17-101(i)(3). Our
analysis here of Maryland 529 checks therefore encompasses checks that
the outside program managers issue on Maryland 529’s behalf. In the
event that an outside program manager is directly liable on any
distribution checks, such checks would also likely be subject to the Act,
albeit under a different analysis. See infra note 30.
Gen. 21] 53
To be clear, the check itself is not intangible property; it is
only a “piece[] of paper” that documents the underlying right to be
paid. Revenue Cabinet, 702 S.W.2d at 434; accord Cory, 120 Cal.
App. 3d at 736. Thus, where the sum reflected on an outstanding
check is no longer payable—because, for example, the payee has
accepted payment through a different instrument or reversed the
original payment instructions—the sum is not intangible property
and is not subject to a presumption of abandonment. See Revenue
Cabinet, 702 S.W.2d at 436 (“The issue is whether [the payor] is
obliged to honor the debt which the checks represent.”); cf.
RUUPA § 1005(c) (providing that a payor may demonstrate that a
check was “replaced with another instrument,” “paid, satisfied, or
discharged,” “issued in error,” or prove other facts to overcome the
presumption that the check records an undischarged obligation).
Similarly, in the unusual circumstance where the check does not
represent a payment obligation to begin with—e.g., if the check
represents a settlement offer—there is no right to be paid and the
underlying sum is not intangible property. Revenue Cabinet, 702
S.W.2d at 735-36; cf. RUUPA § 1005(c)(1). In short, a check is
evidence of a right to be paid that constitutes intangible property,
but the evidence is rebuttable.
The Maryland Act tracks this treatment of sums payable on
uncashed checks, albeit with one exception for checks issued
between businesses. The Act follows the language of the 1954
Uniform Act in specifying that the “creditor, claimant, or payee” is
the “owner” of a “chose[] in action.” CL § 17-101(k)(3). The Act
does not define the terms “intangible personal property” or
“personal property” directly, but it does specify that certain items
do not constitute “personal property.” Id. § 17-101(m). Among
these excluded items are “[o]utstanding checks or credits issued to
vendors or commercial customers in the ordinary course of
business,” id. § 17-101(m)(3), an exclusion that the General
Assembly enacted in 1998 as part of a package of “business-to-
business” exceptions, 1998 Md. Laws, ch. 663; see Siemens USA
Holdings, Inc. v. Geisenberger, 17 F.4th 393, 417 n.32 (3d Cir.
2021) (“[B]usiness-to-business transactions and gift certificates are
exempt from several states’ escheatment laws.”). If sums payable
on checks were not ordinarily “intangible property” under the Act,
that exclusion would not have been necessary. In light of these
provisions, then, sums payable on uncashed checks constitute
“intangible personal property” under the Act, unless the checks fall
54 [108 Op. Att’y
within the business-to-business exception. See CL § 17-101(k)(3),
(m).28
Once the term “intangible personal property” is understood to
generally include sums payable on uncashed checks, one can easily
see based on the statutory text how the Act might apply to sums
payable on uncashed distribution checks issued by Maryland 529.
Regardless of whether Maryland 529 is considered, for purposes of
the Act, to be a fiduciary governed by CL § 17-306, a public entity
governed by CL § 17-307, or a holder of property that falls under
the omnibus provision, CL § 17-308(b), the language of the Act
28
We do not think that the business-to-business exception is likely to
apply here. First of all, government agencies such as Maryland 529
might not even fall within the scope of the exception, which appears
aimed at transactions between private businesses. See Siemens USA
Holdings, Inc., 17 F.4th at 417 n.32 (noting that the exception is for
“business-to-business transactions”); Bill File on H.B. 48, 1998 Leg.,
Reg. Sess., Economic Matters Comm., Bill Analysis at 2 (explaining that
the bill sought to align the Act with the fact that “[c]redit balances
between businesses are often resolved in ways that are not reflected in
the businesses[’] accounting records” and providing an example of an
uncashed check for the supply of goods between private businesses). But
as we do not have complete information about the range of checks that
Maryland 529 issues or its business relationships, we hesitate to decide
whether the business-to-business exception could ever exempt a
Maryland 529 check from the Act. Rather, in responding to the question
about 529 accounts, we conclude only that the variety of checks of which
we are aware that draw against 529 account balances—namely,
distribution checks sent to account holders, beneficiaries, and
educational institutions, see 2019 OLA Audit Report at 15, 21—do not
fall within the exception. As for those checks, the “business-to-
business” exemption applies only to “[o]utstanding checks or credits
issued to vendors or commercial customers in the ordinary course of
business.” CL § 17-101(m)(3). Account holders, beneficiaries, and
educational institutions do not fit within the plain meaning of the term
“vendors or commercial customers” in these circumstances, especially
when that language is understood in the context of the underlying
legislative purpose to exempt sums payable on checks issued between
businesses in high-volume commercial relationships. See § 17-
101(m)(3); Bill File on H.B. 48, 1998 Leg., Reg. Sess., Economic
Matters Comm., Bill Analysis at 2. Thus, CL § 17-101(m)(3) does not
exempt these checks from the reach of the Act. (To be clear, we do not
mean to say that an educational institution could never be the “vendor or
commercial customer” of a private business, only that an educational
institution receiving a tuition payment from a student or parent—or from
a savings plan that distributes tuition payments on their behalf—is not a
“vendor or commercial customer” with respect to such persons or
entities.)
Gen. 21] 55
appears to subject the “intangible personal property” that Maryland
529 holds for others to a presumption of abandonment after a three-
year dormancy period. In other words, all three sections of the Act
that might apply to Maryland 529 align on the point that the
“intangible personal property” it holds is, if otherwise covered by
the Act, subject to a three-year dormancy period.
Although we have concluded that the 529 accounts are not
covered by the Act, these provisions of the Act, when applied to
sums payable on uncashed checks, do not appear to raise the same
thorny ambiguities that they do when applied to 529 accounts
themselves. The unique tax advantages and long-term investment
timelines of 529 accounts set them apart from other investment
accounts in a way that the Act does not accommodate, but
Maryland 529 distribution checks do not (so far as we are aware)
contain unique features that set them apart in any relevant way from
other checks evidencing rights to receive payment. Some of the
uncashed checks that the agency has dealt with in the past are cash
distributions to account holders or beneficiaries; others are tuition
payments that Maryland 529 remits directly to educational
institutions. See 2019 OLA Audit Report at 15, 21. Either way,
the “owner” of the sum payable on a Maryland 529 check is the
payee (whether that payee be an account holder, a beneficiary, or a
school). CL § 17-101(k)(3). And a sum payable on a Maryland
529 check would clearly be either “payable” within the plain
language of the omnibus and fiduciary provisions, id. §§ 17-306,
17-308(b), or “held for the [payee]” within the meaning of the
public entities provision, id. § 17-307.29
Of course, as noted earlier, if such a sum no longer remains
payable for some concrete reason—because it was paid through a
separate instrument, for example, or because the check was issued
in error—then the Act does not apply to it. See Revenue Cabinet,
702 S.W.2d at 436. In the ordinary course, however, the text of
any of the three relevant provisions governs the sums payable on
Maryland 529 checks, just as the provisions govern sums payable
on other checks. See Cory, 120 Cal. App. 3d at 736. As such, if a
29
ABLE account holders may opt to load account funds onto a prepaid
card that can be used for qualifying expenses, rather than taking
distributions by check. See ABLE Discl. at 17-18. We understand that
these prepaid cards have not prompted legal questions under the
Abandoned Property Act to this point, and we therefore do not address
how the Act might apply to them. On a separate note, we understand
that Maryland 529 does not yet pay benefits by electronic transfer (as
opposed to by check), and thus we do not address any issues that might
arise related to such transfers.
56 [108 Op. Att’y
sum payable on a Maryland 529 check remains unclaimed for three
years, in our view it is presumed abandoned under the Act unless
the payee corresponds about the sum or indicates an interest in it.
See CL §§ 17-306, 17-307, 17-308(b).30
Importantly, we also think that application of the Act to the
sums payable on Maryland 529 checks comports with the context
and purpose of the relevant statutory schemes and avoids the
illogical consequences that would follow from application of the
Act to 529 accounts themselves. An authorization of the account
holder precipitates the issuance of a check that draws down account
funds because, at least as we understand it, Maryland 529 generally
distributes money from an account only at the account holder’s
direction. See, e.g., Educ. § 18-19A-04(b) (“Distributions shall be
requested by the account holder”).31 Checks for amounts to be
drawn from 529 accounts thus represent funds pushed from the
accounts by the active choice of an account holder—not funds that
30
One provision of the Act expressly subjects sums payable on
outstanding checks on which any “banking or financial organization or
business association is directly liable” to a three-year dormancy period.
CL § 17-301(b)(3). We doubt that this provision applies to Maryland
529 checks. The Act’s definitions of “banking organization,” “financial
organization” and “business organization” do not contain any indication
that the General Assembly intended them to encompass State agencies.
Id. § 17-101(d), (e), (h); see 73 Opinions of the Attorney General 234,
236 (1988) (explaining that general statutory terms do not “extend to the
State or its political subdivisions in the absence of some manifest
legislative intention that they be included”). If the outside program
managers administering any of the three 529 programs for Maryland 529
issue distribution checks on which the outside managers are directly
liable, it seems likely that this provision would apply to such checks. If
so, it would yield the same result as the Act’s other provisions do for
Maryland 529 checks that draw against 529 account balances: sums
payable on the checks would be subject to a three-year dormancy period.
See CL § 17-301(b)(3).
31
According to the program disclosures, Maryland 529 distributes
funds from an account without the account holder’s authorization only
in unusual circumstances—such as where a court order requires the
distribution, or perhaps where a 529 program inadvertently accepts a
contribution that exceeds statutory caps. See MCIP Discl. at 28 (court
order exception); ABLE Discl. at 14 (excess contributions). Even in
these circumstances, however, some event other than mere account
inactivity triggers the distribution. The termination of an MPCT account
due to the expiration of the benefits period (i.e., the period that ends ten-
plus years after the beneficiary’s projected college enrollment date) does
not trigger a distribution unless the account holder authorizes it. MPCT
Discl. at 12-13.
Gen. 21] 57
would be removed from accounts and subjected to tax
consequences only because of three years of inactivity. We do not
perceive any affront to the nature of the 529 schemes in following
the Act’s prescriptions for regulating such unclaimed funds by
turning them over to the Comptroller for safekeeping and location
efforts.32
Indeed, subjecting sums payable on uncashed distribution
checks to the Act would not trigger the illogical tax consequences
that would follow from subjecting 529 accounts themselves to the
Act. The IRS has not clarified whether unclaimed distribution
checks carry tax consequences on their own, regardless of any
subsequent transfers to an unclaimed property fund. See IRS Rev.
Rul. 19-19, 2019-36 I.R.B. (holding, in the separate context of tax-
advantaged retirement savings, that a payee’s failure to cash a
distribution check that she received does not alter the tax
consequences of the distribution, but not addressing situations
where the plan does not know whether a check was received and
noting that the IRS continues to analyze “situations involving
missing individuals”); Bruce J. McNeil, Nonqualified Deferred
Compensation Plans § 1:10 (2022) (“What the ruling does not
address is the degree to which modifications in the fact set must
vary to impact the holding . . . . It is hoped that future guidance will
be released to help plans handle variations on this uncashed check
scenario . . . .”). But there is no need to decide that question here.
Rather, the point is that, even if transfer of these sums to the
Comptroller would create tax consequences not already generated
by the issuance of the distribution checks, those tax consequences
would not be illogical.
32
To be clear, in reaching this conclusion with respect to sums
payable on 529 distribution checks, we do not mean to suggest that the
Act would be construed to apply to sums payable on uncashed checks
(or any other property) held by State-sponsored retirement plans for
public employees. The applicability of the Act to those plans would raise
different questions that are outside the scope of this opinion. To take just
one example, such plans might be governed by alternative schemes for
the regulation of unclaimed property. See Md. Code Ann., State Pers.
& Pens. § 21-506 (authorizing the State Retirement Agency to publish
the names of participants with unclaimed contributions or benefits),
§ 21-311(d) (authorizing the State Retirement Agency to transfer
unclaimed employee contributions to a fund used to pay out benefits);
see also supra note 15 (discussing unique issues raised by governmental
retirement plans). As our analysis with respect to both 529 accounts and
checks shows, whether the Act applies in a particular context often turns
upon interpretive conflicts, illogical consequences, and other
considerations unique to that context. For this reason, our conclusions
here should not be extended to another context without further analysis.
58 [108 Op. Att’y
Unlike in the hypothetical situation where an account
transfers to the Comptroller due to inactivity alone, the account
holder has authorized the distribution of the sum payable on the
check. This authorization probably means, in most cases, that tax
penalties either will not result (because the beneficiary has
qualifying expenses in the year of the distribution) or will be
expected (because the account holder initiated the distribution
notwithstanding a lack of qualifying expenses). See 2019 OLA
Audit Report at 15-16 (distributions are often to “reimburse
[participants] for tuition and qualified expenses already paid” and
to pay requested refunds).
It is true that account holders and beneficiaries might realize
some benefits if the sums payable on uncashed checks remained in
their accounts rather than transferring to the Comptroller after three
years. See 2019 OLA Audit Report at 22 (under Maryland 529
practice, sums payable on uncashed checks from the Prepaid Trust
are credited “back to the associated accounts”). In the accounts,
these funds could continue to appreciate attributable earnings; with
the Comptroller, they will not. See Vega, 174 F.3d at 873(explaining that the transfer of sums payable on uncashed checks
from a pension plan to a state unclaimed property fund depletes the
sums by halting their appreciation).
Yet, once again, because this consequence flows from the
account holder’s decision to trigger a distribution—and not merely
from three years of inactivity on a long-term investment—it does
not strike us as illogical. Most provisions in the Act, including
those potentially relevant to Maryland 529, expressly contemplate
transfer to the Comptroller of interest-bearing or invested property
that is left unclaimed for more than three years. See CL § 17-306
(covering “all intangible personal property and any income or
increment on it” held by fiduciaries (emphasis added)); § 17-308(b)
(similar language in omnibus provision). These provisions no
doubt cover a wide swath of funds that, if allowed to remain with
their source, would accrue interest or other appreciation. See 1954
Uniform Act § 9 cmt (explaining that the omnibus section applies
to items such as “stocks, bonds, . . . interest, dividends, income, . .
. together with any interest or increment thereon”). But the General
Assembly, following the 1954 uniform law, nonetheless subjected
such funds to the Act, presumably in large part because their
transfer to the Comptroller improves the chances of finding the
owners. See id., Prefatory Note, at 2 (policy purposes).
We also do not think that application of the Act to sums
payable on the uncashed distribution checks contravenes the 529
Gen. 21] 59
enabling statutes. Each of the enabling statutes, as we have
discussed, prohibits the deposit of 529 funds into the State
Treasury. E.g., Educ. § 18-1903(f). Because funds that are
transferred to the Comptroller as abandoned property are then
deposited in the State Treasury, CL § 17-317, there is at least some
question as to whether this prohibition should be read to exempt
even the agency’s uncashed distribution checks from the scope of
the Abandoned Property Act. But the prohibition on Treasury
deposits only applies to program moneys—for example, “[m]oney
of the Trust,” in the case of the Prepaid Trust, Educ. § 18-1903(f),
and “[m]oney of the Plan” in the case of the Investment Plan, id.
§ 18-91A-05(c). That language is ambiguous as to whether it was
intended to include sums payable on distribution checks. Such
sums, as we have explained, represent moneys that the account
holder has affirmatively decided to remove from the relevant 529
program. This decision, by triggering the issuance of a distribution
check, creates an enforceable legal obligation that subjects the
sums to non-program constraints from which 529 accounts
themselves are shielded. See generally Diemar & Kirk Co. v. Smart
Styles, Inc., 261 N.C. 156, 159 (1964) (explaining that a check
constitutes a contract between issuer and payee). Most obviously,
it exposes the sums to outside interests—namely, those of the
payees on the checks, who are not necessarily program participants.
See 2019 OLA Audit Report at 21 (noting distribution checks
payable to colleges and universities). Further, by issuing the
distribution check, Maryland 529 has already taken the action
required of it to push the funds out of its coffers. See generally
Messing v. Bank of America, N.A., 373 Md. 672, 678 (2003)
(explaining that a check is “payable on demand”). Whether the
funds in fact transfer out depends only on whether the payee or an
endorsee presents the check for payment.
Thus, although the moneys technically remain with Maryland
529 until they clear the bank, there is reason to doubt that the
General Assembly would have viewed those moneys as program
funds within the meaning of provisions like Educ. §§ 18-1903(f)
and 18-91A-05(c). In other words, we cannot say from the
statutory language alone that the General Assembly intended the
prohibition on Treasury deposits of program moneys to include the
deposit of these outgoing sums in the State Treasury for limited
purposes under the Abandoned Property Act. After all, the
legislative intent behind the prohibition was to prevent 529 funds
from being “captured by the State,” Hoffman Letter, and we do not
think the General Assembly would have viewed it as improper
“capture” for the Comptroller merely to take custody of sums
payable on errant distribution checks for the primary purpose of
60 [108 Op. Att’y
safeguarding them for the payee after the account holder has
already acted affirmatively to remove the funds from the account.
Cf. Connecticut Mutual Life Ins. Co. v. Moore, 333 U.S. 541, 547
(1948) (explaining that the state acts as a “conservator” for
abandoned funds under unclaimed property laws).
Instead, we must seek to harmonize the language of the 529
enabling statutes with the Abandoned Property Act. See Immanuel,
449 Md. at 87. The 529 statutes, while clearly reflecting an intent
to protect 529 accounts from diversion to other State uses, do not
specifically address the phenomenon of uncashed checks (or even
mention the Abandoned Property Act, the plain language of which
would otherwise apply to the sums payable on these checks).
In our view, interpreting the Abandoned Property Act to apply
to sums payable on uncashed distribution checks but not to the
accounts themselves achieves the requisite interpretative harmony.
Under this interpretation, 529 accounts do not transfer to the State
Treasury due to inactivity alone, in conformity with the
safeguarding objective of the 529 enabling statutes and with the
wider context and purpose of the 529 programs, which would be
undermined by the illogical tax consequences and other
ramifications of applying the Act to the accounts themselves. At
the same time, under our interpretation, sums payable on uncashed
distribution checks that remain unclaimed beyond the dormancy
period will transfer to the Comptroller (assuming Maryland 529’s
efforts to contact the payee do not succeed). Such sums, as we have
explained, remain unclaimed even after the account holder has
actively chosen to pull them out of the tax-advantaged, long-term
savings account. Unlike funds that sit undisturbed within 529
accounts themselves, sums payable on distribution checks that
remain unclaimed for three years fall more logically within the
sweep of the Abandoned Property Act’s program for locating
missing property owners than the 529 statutes’ prohibitions against
diversion of long-term education and disability savings.
We recognize that it may seem odd at first glance to
distinguish sums payable on checks drawn against 529 accounts
from the underlying accounts. After all, both types of funds come
from the same pool. See Vega, 174 F.3d at 873 (noting, in the
pension plan context, that “until the check to the beneficiary is
actually presented to the plan for payment through the banking
system, and paid, the money due to the beneficiary is an asset of
the plan”). But the Maryland Act, like unclaimed property laws in
general, treats sums payable on uncashed checks as a distinct type
of intangible personal property. See CL § 17-101(m)(3) (business-
Gen. 21] 61
to-business exemption for “outstanding checks”); § 17-301(b)(3)
(addressing “sum[s] payable on a check” in the banking and
financial sectors); see also RUUPA § 102(24) (defining “property”
to include intangible property “evidenced by . . . [a] check”).
Because the statute itself traces a distinction between sums payable
on uncashed checks and other types of intangible property, we
think that the same distinction logically bears upon the 529
programs, particularly given our conclusion that application of the
Act to the uncashed checks (but not the underlying accounts) does
not conflict with the General Assembly’s statutory scheme for
those programs.
We make two final points about compliance with the Act’s
requirements for uncashed checks. First, an organization may
cancel or void an uncashed check, but this action by itself does not
alter the organization’s obligation to report the sum payable on the
check as abandoned property. The Act’s presumption of
abandonment applies to the underlying payment obligation that the
check records, not the check itself. Cory, 120 Cal. App. 3d at 736.
As we have explained, so long as the underlying sum remains due
to the payee, it remains subject to the Act’s mandates. See id.;
Revenue Cabinet, 702 S.W.2d at 436. Were the rule otherwise, the
Act’s regulation of sums payable on uncashed checks would have
little meaning: financial institutions and other property holders
could evade it and retain the windfall of unclaimed sums by voiding
uncashed checks before the end of the three-year dormancy period.
See Treasurer & Receiver General v. John Hancock Mut. Life Ins.
Co., 388 Mass. 410, 417-18 (1983) (rejecting an interpretation that
“would create a situation in which the purposes of the
[Massachusetts] abandoned property act, to reunite the property
with its owners and to employ the property for public purposes in
the interim, could not be achieved”); cf. RUUPA § 1005 & cmt.
(providing, in line with the case law on uncashed checks, that to
overcome the presumption that an uncashed check corresponds to
an undischarged obligation to pay, the holder may prove the lack
of any such undischarged obligation).
Second, before reporting and transferring sums payable on
uncashed checks to the Comptroller upon expiration of the three-
year dormancy period, Maryland 529 must send written notice to
the payee by first-class mail if the sum exceeds $100. CL § 17-
308.2.
62 [108 Op. Att’y
2. Out-of-State Property Owners
In responding to your agency’s questions, we have been
focused on Maryland’s Abandoned Property Act. We note,
however, that where Maryland 529 holds unclaimed property that
belongs to people in other states, the unclaimed property laws of
the other states will typically apply. See CL § 17-309; Delaware
v. Pennsylvania, 143 S. Ct. 696, 701-03 (2023) (explaining that,
under federal common law, the state of the last known address of
the owner has primary power to escheat unclaimed intangible
property, except where Congress has abrogated the common law
rule for money orders, traveler’s checks, and similar financial
products).
For uncashed checks, if the payee’s last known address is in
another state, Maryland 529 should consult the laws of that state to
determine if and when it must treat the unclaimed sum as
abandoned. See CL § 17-309. Many state laws subject uncashed
checks to a three-year dormancy period. See generally RUUPA
§§ 102(24)(B)(i), 201(13), 201 cmt. (three-year dormancy period
for most property types, including checks).
Similarly, for 529 accounts held for participants who reside in
other states, Maryland 529 should consult the unclaimed property
laws of the other states. See Delaware, 143 S. Ct. at 701-03.
Unlike Maryland’s Act, the unclaimed property laws of some other
states do apply to 529 accounts and provide that they shall be
presumed abandoned in certain circumstances. E.g., Colo. Rev.
Stat. Ann. § 38-13-203 (following RUUPA’s 30-year waiting
period before dormancy period may begin for college savings
accounts).33
III
Conclusion
The extent to which the Abandoned Property Act should
apply to Maryland 529 is an issue ripe for legislative consideration
and one to which other state legislatures have spoken. As Maryland
law stands now, we conclude that the Act does not apply to
33
Although the issue is not one of Maryland law, we note that under
the laws of other states that follow RUUPA in regulating unclaimed 529
accounts, the relevant ownership address would appear to be that of the
account holder. See RUUPA § 102 cmt. (“[F]or bank accounts,
brokerage accounts, IRAs, and other similar property, the legal owner of
the account would take precedence over a named beneficiary who does
not yet have legal ownership of the account.”).
Gen. 21] 63
Maryland 529 accounts. The General Assembly likely did not
intend the Act’s three-year, generally applicable dormancy periods
to govern the tax-advantaged, long-term savings vehicles that the
529 enabling statutes established. But our view is that the Act as
currently written likely does apply to sums payable on uncashed
distribution checks that draw against 529 account balances,
although the question is certainly close. As a final note, Maryland
529 should consult the unclaimed property laws of other states
when it holds unclaimed property, including unclaimed accounts or
checks, for out-of-state participants.
Anthony G. Brown
Attorney General of Maryland
Ben Harrington
Assistant Attorney General
Patrick B. Hughes
Chief Counsel, Opinions and Advice
* Meghan Marek, Assistant Attorney General, contributed
significantly to the preparation of this opinion.