Illinois General Assembly - Full Text of SB2268
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Full Text of SB2268  99th General Assembly




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1    AN ACT concerning State government.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The State Treasurer Act is amended by changing
5Section 16.6 as follows:
6    (15 ILCS 505/16.6)
7    Sec. 16.6. ABLE account program.
8    (a) As used in this Section:
9    "ABLE account" or "account" means an account established
10for the purpose of financing certain qualified expenses of
11eligible individuals as specifically provided for in this
12Section and authorized by Section 529A of the Internal Revenue
14    "ABLE account plan" or "plan" means the savings account
15plan provided for in this Section.
16    "Account administrator" means the person selected by the
17State Treasurer to administer the daily operations of the ABLE
18account plan and provide marketing, recordkeeping, investment
19management, and other services for the plan.
20    "Aggregate account balance" means the amount in an account
21on a particular date or the fair market value of an account on
22a particular date.
23    "Beneficiary" means the ABLE account owner.



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1    "Board" means the Illinois State Board of Investment.
2    "Contracting state" means a state without a qualified ABLE
3program which has entered into a contract with Illinois to
4provide residents of the contracting state access to a
5qualified ABLE program.
6    "Designated representative" means a person who is
7authorized to act on behalf of an account owner. An account
8owner is authorized to act on his or her own behalf unless the
9account owner is a minor or the account owner has been
10adjudicated to have a disability so that a guardian has been
11appointed. A designated representative acts in a fiduciary
12capacity to the account owner. The State Treasurer shall
13recognize a person as a designated representative without
14appointment by a court in the following order of priority:
15        (1) The account owner's plenary guardian of the estate,
16    or the account owner's limited guardian of financial or
17    contractual matters. Any guardian acting in this capacity
18    shall not be required to seek court approval for any ABLE
19    qualified distributions.
20        (2) The agent named by the account owner in a property
21    power of attorney recognized as a statutory short form
22    power of attorney for property.
23        (3) Such individual or entity that the account owner so
24    designates in writing, in a manner to be established by the
25    State Treasurer.
26        (4) Such other individual or entity designated by the



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1    State Treasurer pursuant to its rules.
2    "Disability certification" has the meaning given to that
3term under Section 529A of the Internal Revenue Code.
4    "Eligible individual" has the meaning given to that term
5under Section 529A of the Internal Revenue Code.
6    "Participation agreement" means an agreement to
7participate in the ABLE account plan between an account owner
8and the State, through its agencies and the State Treasurer.
9    "Qualified disability expenses" has the meaning given to
10that term under Section 529A of the Internal Revenue Code.
11    "Qualified withdrawal" or "qualified distribution" means a
12withdrawal from an ABLE account to pay the qualified disability
13expenses of the beneficiary of the account.
14    (b) The "Achieving a Better Life Experience" or "ABLE"
15account program is hereby created and shall be administered by
16the State Treasurer. The purpose of the ABLE plan is to
17encourage and assist individuals and families in saving private
18funds for the purpose of supporting individuals with
19disabilities to maintain health, independence, and quality of
20life, and to provide secure funding for disability-related
21expenses on behalf of designated beneficiaries with
22disabilities that will supplement, but not supplant, benefits
23provided through private insurance, federal and State medical
24and disability insurance, the beneficiary's employment, and
25other sources. Under the plan, a person may make contributions
26to an ABLE account to meet the qualified disability expenses of



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1the designated beneficiary of the account. The plan must be
2operated as an accounts-type plan that permits persons to save
3for qualified disability expenses incurred by or on behalf of
4an eligible individual.
5    The State Treasurer shall promote awareness of the
6availability and advantages of the ABLE account plan as a way
7to assist individuals and families in saving private funds for
8the purpose of supporting individuals with disabilities. The
9cost of these promotional efforts shall not be funded with fees
10imposed on participants by the State Treasurer.
11    The State Treasurer shall not accept contributions for ABLE
12accounts under this Section until the Internal Revenue Service
13has issued its final regulations or interim guidance concerning
14ABLE accounts.
15    A separate account must be maintained for each beneficiary
16for whom contributions are made, and no more than one account
17shall be established per beneficiary. If an ABLE account is
18established for a designated beneficiary, no account
19subsequently established for such beneficiary shall be treated
20as an ABLE account. The preceding sentence shall not apply in
21the case of an ABLE account established for purposes of a
22rollover as permitted under Section 529A of the Internal
23Revenue Code.
24    An ABLE account may be established under this Section only
25for a designated beneficiary who is a resident of Illinois, or
26a resident of a contracting state, or a resident of any other



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2    Prior to the establishment of an ABLE account, an account
3owner must provide documentation to the State Treasurer that
4the account beneficiary is an eligible individual.
5    Annual contributions to an ABLE account on behalf of a
6beneficiary are subject to the requirements of subsection (b)
7of Section 529A of the Internal Revenue Code. No person may
8make a contribution to an ABLE account if such a contribution
9would result in the aggregate account balance of an ABLE
10account exceeding the account balance limit authorized under
11Section 529A of the Internal Revenue Code. The Treasurer shall
12review the contribution limit at least annually.
13    The State Treasurer shall administer the plan, including
14accepting and processing applications, maintaining account
15records, making payments, and undertaking any other necessary
16tasks to administer the plan, including the appointment of an
17account administrator. The State Treasurer may contract with
18one or more third parties to carry out some or all of these
19administrative duties, including, but not limited to,
20providing investment management services, incentives, and
21marketing the plan.
22    In designing and establishing the plan's requirements and
23in negotiating or entering into contracts with third parties
24under this Section, the State Treasurer shall consult with the
25Board. The State Treasurer shall establish fees to be imposed
26on participants to recover the costs of administration,



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1recordkeeping, and investment management. The State Treasurer
2must use his or her best efforts to keep these fees as low as
3possible, consistent with efficient administration.
4    The Illinois ABLE Accounts Administrative Fund is created
5as a nonappropriated trust fund in the State treasury. The
6State Treasurer shall use moneys in the Administrative Fund to
7pay for administrative expenses he or she incurs in the
8performance of his or her duties under this Section. The State
9Treasurer shall use moneys in the Administrative Fund to cover
10administrative expenses incurred under this Section. The
11Administrative Fund may receive any grants or other moneys
12designated for administrative purposes from the State, or any
13unit of federal, state, or local government, or any other
14person, firm, partnership, or corporation. Any interest
15earnings that are attributable to moneys in the Administrative
16Fund must be deposited into the Administrative Fund. Any fees
17established by the State Treasurer to recover the costs of
18administration, recordkeeping, and investment management shall
19be deposited into the Administrative Fund.
20    Subject to appropriation, the State Treasurer may pay
21administrative costs associated with the creation and
22management of the plan until sufficient assets are available in
23the Administrative Fund for that purpose.
24    Applications for accounts, account owner data, account
25data, and data on beneficiaries of accounts are confidential
26and exempt from disclosure under the Freedom of Information



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2    (c) The State Treasurer may invest the moneys in ABLE
3accounts in the same manner and in the same types of
4investments provided for the investment of moneys by the Board.
5To enhance the safety and liquidity of ABLE accounts, to ensure
6the diversification of the investment portfolio of accounts,
7and in an effort to keep investment dollars in the State, the
8State Treasurer may make a percentage of each account available
9for investment in participating financial institutions doing
10business in the State, except that the accounts may be invested
11without limit in investment options from open-ended investment
12companies registered under Section 80a of the federal
13Investment Company Act of 1940. The State Treasurer may
14contract with one or more third parties for investment
15management, recordkeeping, or other services in connection
16with investing the accounts.
17    The account administrator shall annually prepare and adopt
18a written statement of investment policy that includes a risk
19management and oversight program. The risk management and
20oversight program shall be designed to ensure that an effective
21risk management system is in place to monitor the risk levels
22of the ABLE plan, to ensure that the risks taken are prudent
23and properly managed, to provide an integrated process for
24overall risk management, and to assess investment returns as
25well as risk to determine if the risks taken are adequately
26compensated compared to applicable performance benchmarks and



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2    The State Treasurer may enter into agreements with other
3states to either allow Illinois residents to participate in a
4plan operated by another state or to allow residents of other
5states to participate in the Illinois ABLE plan.
6    (d) The State Treasurer shall ensure that the plan meets
7the requirements for an ABLE account under Section 529A of the
8Internal Revenue Code. The State Treasurer may request a
9private letter ruling or rulings from the Internal Revenue
10Service and must take any necessary steps to ensure that the
11plan qualifies under relevant provisions of federal law.
12Notwithstanding the foregoing, any determination by the
13Secretary of the Treasury of the United States that an account
14was utilized to make non-qualified distributions shall not
15result in an ABLE account being disregarded as a resource.
16    A person may make contributions to an ABLE account on
17behalf of a beneficiary. Contributions to an account made by
18persons other than the account owner become the property of the
19account owner. Contributions to an account shall be considered
20as a transfer of assets for fair market value. A person does
21not acquire an interest in an ABLE account by making
22contributions to an account. A contribution to any account for
23a beneficiary must be rejected if the contribution would cause
24either the aggregate or annual account balance of the account
25to exceed the limits imposed by Section 529A of the Internal
26Revenue Code.



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1    Any change in account owner must be done in a manner
2consistent with Section 529A of the Internal Revenue Code.
3    Notice of any proposed amendments to the rules and
4regulations shall be provided to all owners or their designated
5representatives prior to adoption. Amendments to rules and
6regulations shall apply only to contributions made after the
7adoption of the amendment. Amendments to this Section
8automatically amend the participation agreement. Any
9amendments to the operating procedures and policies of the plan
10shall automatically amend the participation agreement after
11adoption by the State Treasurer.
12    All assets of the plan, including any contributions to
13accounts, are held in trust for the exclusive benefit of the
14account owner and shall be considered spendthrift accounts
15exempt from all of the owner's creditors. The plan shall
16provide separate accounting for each designated beneficiary
17sufficient to satisfy the requirements of paragraph (3) of
18subsection (b) of Section 529A of the Internal Revenue Code.
19Assets must be held in either a state trust fund outside the
20State treasury, to be known as the Illinois ABLE plan trust
21fund, or in accounts with a third-party provider selected
22pursuant to this Section. Amounts contributed to ABLE accounts
23shall not be commingled with State funds and the State shall
24have no claim to or against, or interest in, such funds.
25    Plan assets are not subject to claims by creditors of the
26State and are not subject to appropriation by the State.



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1Payments from the Illinois ABLE account plan shall be made
2under this Section.
3    The assets of ABLE accounts and their income may not be
4used as security for a loan.
5    The assets of ABLE accounts and their income and operation
6shall be exempt from all taxation by the State of Illinois and
7any of its subdivisions to the extent exempt from federal
8income taxation. The accrued earnings on investments in an ABLE
9account once disbursed on behalf of a designated beneficiary
10shall be similarly exempt from all taxation by the State of
11Illinois and its subdivisions to the extent exempt from federal
12income taxation, so long as they are used for qualified
14    Notwithstanding any other provision of law that requires
15consideration of one or more financial circumstances of an
16individual, for the purpose of determining eligibility to
17receive, or the amount of, any assistance or benefit authorized
18by such provision to be provided to or for the benefit of such
19individual, any amount, including earnings thereon, in the ABLE
20account of such individual, any contributions to the ABLE
21account of the individual, and any distribution for qualified
22disability expenses shall be disregarded for such purpose with
23respect to any period during which such individual maintains,
24makes contributions to, or receives distributions from such
25ABLE account.
26    (e) The account owner or the designated representative of



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1the account owner may request that a qualified distribution be
2made for the benefit of the account owner. Qualified
3distributions shall be made for qualified disability expenses
4allowed pursuant to Section 529A of the Internal Revenue Code.
5Qualified distributions must be withdrawn proportionally from
6contributions and earnings in an account owner's account on the
7date of distribution as provided in Section 529A of the
8Internal Revenue Code. Upon the death of a beneficiary, the
9amount remaining in the beneficiary's account must be
10distributed pursuant to subsection (f) of Section 529A of the
11Internal Revenue Code.
12    (f) The State Treasurer may adopt rules to carry out the
13purposes of this Section. The State Treasurer shall further
14have the power to issue peremptory rules necessary to ensure
15that ABLE accounts meet all of the requirements for a qualified
16state ABLE program under Section 529A of the Internal Revenue
17Code and any regulations issued by the Internal Revenue
19(Source: P.A. 99-145, eff. 1-1-16.)
20    Section 99. Effective date. This Act takes effect upon
21becoming law.