Illinois General Assembly - Full Text of SB2660
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Full Text of SB2660  100th General Assembly


Sen. Scott M. Bennett

Filed: 3/7/2018





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2    AMENDMENT NO. ______. Amend Senate Bill 2660 by replacing
3everything after the enacting clause with the following:
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



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1State Treasurer to administer the daily operations of the ABLE
2account plan and provide marketing, recordkeeping, investment
3management, and other services for the plan.
4    "Aggregate account balance" means the amount in an account
5on a particular date or the fair market value of an account on
6a particular date.
7    "Beneficiary" means the ABLE account owner.
8    "Board" means the Illinois State Board of Investment.
9    "Contracting state" means a state without a qualified ABLE
10program which has entered into a contract with Illinois to
11provide residents of the contracting state access to a
12qualified ABLE program.
13    "Designated representative" means a person who is
14authorized to act on behalf of an account owner. An account
15owner is authorized to act on his or her own behalf unless the
16account owner is a minor or the account owner has been
17adjudicated to have a disability so that a guardian has been
18appointed. A designated representative acts in a fiduciary
19capacity to the account owner. The State Treasurer shall
20recognize a person as a designated representative without
21appointment by a court in the following order of priority:
22        (1) The account owner's plenary guardian of the estate,
23    or the account owner's limited guardian of financial or
24    contractual matters. Any guardian acting in this capacity
25    shall not be required to seek court approval for any ABLE
26    qualified distributions.



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1        (2) The agent named by the account owner in a property
2    power of attorney recognized as a statutory short form
3    power of attorney for property.
4        (3) Such individual or entity that the account owner so
5    designates in writing, in a manner to be established by the
6    State Treasurer.
7        (4) Such other individual or entity designated by the
8    State Treasurer pursuant to its rules.
9    "Disability certification" has the meaning given to that
10term under Section 529A of the Internal Revenue Code.
11    "Eligible individual" has the meaning given to that term
12under Section 529A of the Internal Revenue Code.
13    "Participation agreement" means an agreement to
14participate in the ABLE account plan between an account owner
15and the State, through its agencies and the State Treasurer.
16    "Qualified disability expenses" has the meaning given to
17that term under Section 529A of the Internal Revenue Code.
18    "Qualified withdrawal" or "qualified distribution" means a
19withdrawal from an ABLE account to pay the qualified disability
20expenses of the beneficiary of the account.
21    (b) The "Achieving a Better Life Experience" or "ABLE"
22account program is hereby created and shall be administered by
23the State Treasurer. The purpose of the ABLE plan is to
24encourage and assist individuals and families in saving private
25funds for the purpose of supporting individuals with
26disabilities to maintain health, independence, and quality of



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1life, and to provide secure funding for disability-related
2expenses on behalf of designated beneficiaries with
3disabilities that will supplement, but not supplant, benefits
4provided through private insurance, federal and State medical
5and disability insurance, the beneficiary's employment, and
6other sources. Under the plan, a person may make contributions
7to an ABLE account to meet the qualified disability expenses of
8the designated beneficiary of the account. The plan must be
9operated as an accounts-type plan that permits persons to save
10for qualified disability expenses incurred by or on behalf of
11an eligible individual.
12    The State Treasurer shall promote awareness of the
13availability and advantages of the ABLE account plan as a way
14to assist individuals and families in saving private funds for
15the purpose of supporting individuals with disabilities. The
16cost of these promotional efforts shall not be funded with fees
17imposed on participants by the State Treasurer.
18    The State Treasurer shall not accept contributions for ABLE
19accounts under this Section until the Internal Revenue Service
20has issued its final regulations or interim guidance concerning
21ABLE accounts.
22    A separate account must be maintained for each beneficiary
23for whom contributions are made, and no more than one account
24shall be established per beneficiary. If an ABLE account is
25established for a designated beneficiary, no account
26subsequently established for such beneficiary shall be treated



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1as an ABLE account. The preceding sentence shall not apply in
2the case of an ABLE account established for purposes of a
3rollover as permitted under Section 529A of the Internal
4Revenue Code.
5    An ABLE account may be established under this Section for a
6designated beneficiary who is a resident of Illinois, a
7resident of a contracting state, or a resident of any other
9    Prior to the establishment of an ABLE account, an account
10owner must provide documentation to the State Treasurer that
11the account beneficiary is an eligible individual.
12    Annual contributions to an ABLE account on behalf of a
13beneficiary are subject to the requirements of subsection (b)
14of Section 529A of the Internal Revenue Code. No person may
15make a contribution to an ABLE account if such a contribution
16would result in the aggregate account balance of an ABLE
17account exceeding the account balance limit authorized under
18Section 529A of the Internal Revenue Code. The Treasurer shall
19review the contribution limit at least annually.
20    The State Treasurer shall administer the plan, including
21accepting and processing applications, maintaining account
22records, making payments, and undertaking any other necessary
23tasks to administer the plan, including the appointment of an
24account administrator. The State Treasurer may contract with
25one or more third parties to carry out some or all of these
26administrative duties, including, but not limited to,



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1providing investment management services, incentives, and
2marketing the plan.
3    In designing and establishing the plan's requirements and
4in negotiating or entering into contracts with third parties
5under this Section, the State Treasurer shall consult with the
6Board. The State Treasurer shall establish fees to be imposed
7on participants to recover the costs of administration,
8recordkeeping, and investment management. The State Treasurer
9must use his or her best efforts to keep these fees as low as
10possible, consistent with efficient administration.
11    The Illinois ABLE Accounts Administrative Fund is created
12as a nonappropriated trust fund in the State treasury. The
13State Treasurer shall use moneys in the Administrative Fund to
14pay for administrative expenses he or she incurs in the
15performance of his or her duties under this Section. The State
16Treasurer shall use moneys in the Administrative Fund to cover
17administrative expenses incurred under this Section. The
18Administrative Fund may receive any grants or other moneys
19designated for administrative purposes from the State, or any
20unit of federal, state, or local government, or any other
21person, firm, partnership, or corporation. Any interest
22earnings that are attributable to moneys in the Administrative
23Fund must be deposited into the Administrative Fund. Any fees
24established by the State Treasurer to recover the costs of
25administration, recordkeeping, and investment management shall
26be deposited into the Administrative Fund.



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1    Subject to appropriation, the State Treasurer may pay
2administrative costs associated with the creation and
3management of the plan until sufficient assets are available in
4the Administrative Fund for that purpose.
5    Applications for accounts, account owner data, account
6data, and data on beneficiaries of accounts are confidential
7and exempt from disclosure under the Freedom of Information
9    (c) The State Treasurer may invest the moneys in ABLE
10accounts in the same manner and in the same types of
11investments provided for the investment of moneys by the Board.
12To enhance the safety and liquidity of ABLE accounts, to ensure
13the diversification of the investment portfolio of accounts,
14and in an effort to keep investment dollars in the State, the
15State Treasurer may make a percentage of each account available
16for investment in participating financial institutions doing
17business in the State, except that the accounts may be invested
18without limit in investment options from open-ended investment
19companies registered under Section 80a of the federal
20Investment Company Act of 1940. The State Treasurer may
21contract with one or more third parties for investment
22management, recordkeeping, or other services in connection
23with investing the accounts.
24    The account administrator shall annually prepare and adopt
25a written statement of investment policy that includes a risk
26management and oversight program. The risk management and



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1oversight program shall be designed to ensure that an effective
2risk management system is in place to monitor the risk levels
3of the ABLE plan, to ensure that the risks taken are prudent
4and properly managed, to provide an integrated process for
5overall risk management, and to assess investment returns as
6well as risk to determine if the risks taken are adequately
7compensated compared to applicable performance benchmarks and
9    The State Treasurer may enter into agreements with other
10states to either allow Illinois residents to participate in a
11plan operated by another state or to allow residents of other
12states to participate in the Illinois ABLE plan.
13    (d) The State Treasurer shall ensure that the plan meets
14the requirements for an ABLE account under Section 529A of the
15Internal Revenue Code. The State Treasurer may request a
16private letter ruling or rulings from the Internal Revenue
17Service and must take any necessary steps to ensure that the
18plan qualifies under relevant provisions of federal law.
19Notwithstanding the foregoing, any determination by the
20Secretary of the Treasury of the United States that an account
21was utilized to make non-qualified distributions shall not
22result in an ABLE account being disregarded as a resource.
23    A person may make contributions to an ABLE account on
24behalf of a beneficiary. Contributions to an account made by
25persons other than the account owner become the property of the
26account owner. Contributions to an account shall be considered



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1as a transfer of assets for fair market value. A person does
2not acquire an interest in an ABLE account by making
3contributions to an account. A contribution to any account for
4a beneficiary must be rejected if the contribution would cause
5either the aggregate or annual account balance of the account
6to exceed the limits imposed by Section 529A of the Internal
7Revenue Code.
8    Any change in account owner must be done in a manner
9consistent with Section 529A of the Internal Revenue Code.
10    Notice of any proposed amendments to the rules and
11regulations shall be provided to all owners or their designated
12representatives prior to adoption. Amendments to rules and
13regulations shall apply only to contributions made after the
14adoption of the amendment. Amendments to this Section
15automatically amend the participation agreement. Any
16amendments to the operating procedures and policies of the plan
17shall automatically amend the participation agreement after
18adoption by the State Treasurer.
19    All assets of the plan, including any contributions to
20accounts, are held in trust for the exclusive benefit of the
21account owner and shall be considered spendthrift accounts
22exempt from all of the owner's creditors. The plan shall
23provide separate accounting for each designated beneficiary
24sufficient to satisfy the requirements of paragraph (3) of
25subsection (b) of Section 529A of the Internal Revenue Code.
26Assets must be held in either a state trust fund outside the



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1State treasury, to be known as the Illinois ABLE plan trust
2fund, or in accounts with a third-party provider selected
3pursuant to this Section. Amounts contributed to ABLE accounts
4shall not be commingled with State funds and the State shall
5have no claim to or against, or interest in, such funds.
6    Plan assets are not subject to claims by creditors of the
7State and are not subject to appropriation by the State.
8Payments from the Illinois ABLE account plan shall be made
9under this Section.
10    The assets of ABLE accounts and their income may not be
11used as security for a loan.
12    The assets of ABLE accounts and their income and operation
13shall be exempt from all taxation by the State of Illinois and
14any of its subdivisions to the extent exempt from federal
15income taxation. The accrued earnings on investments in an ABLE
16account once disbursed on behalf of a designated beneficiary
17shall be similarly exempt from all taxation by the State of
18Illinois and its subdivisions to the extent exempt from federal
19income taxation, so long as they are used for qualified
21    Notwithstanding any other provision of law that requires
22consideration of one or more financial circumstances of an
23individual, for the purpose of determining eligibility to
24receive, or the amount of, any assistance or benefit authorized
25by such provision to be provided to or for the benefit of such
26individual, any amount, including earnings thereon, in the ABLE



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1account of such individual, any contributions to the ABLE
2account of the individual, and any distribution for qualified
3disability expenses shall be disregarded for such purpose with
4respect to any period during which such individual maintains,
5makes contributions to, or receives distributions from such
6ABLE account.
7    (e) The account owner or the designated representative of
8the account owner may request that a qualified distribution be
9made for the benefit of the account owner. Qualified
10distributions shall be made for qualified disability expenses
11allowed pursuant to Section 529A of the Internal Revenue Code.
12Qualified distributions must be withdrawn proportionally from
13contributions and earnings in an account owner's account on the
14date of distribution as provided in Section 529A of the
15Internal Revenue Code. Unless prohibited by federal law, upon
16the death of a designated beneficiary, proceeds from an account
17may be transferred to the estate of a designated beneficiary,
18or to an account for another eligible individual specified by
19the designated beneficiary or the estate of the designated
20beneficiary. An agency or instrumentality of the State may not
21seek payment under subsection (f) of Section 529A of the
22federal Internal Revenue Code from the account or its proceeds
23for benefits provided to a designated beneficiary. Upon the
24death of a beneficiary, the amount remaining in the
25beneficiary's account must be distributed pursuant to
26subsection (f) of Section 529A of the Internal Revenue Code.



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1    (f) The State Treasurer may adopt rules to carry out the
2purposes of this Section. The State Treasurer shall further
3have the power to issue peremptory rules necessary to ensure
4that ABLE accounts meet all of the requirements for a qualified
5state ABLE program under Section 529A of the Internal Revenue
6Code and any regulations issued by the Internal Revenue
8(Source: P.A. 99-145, eff. 1-1-16; 99-563, eff. 7-15-16.)
9    Section 10. The Trusts and Trustees Act is amended by
10changing Section 15.1 as follows:
11    (760 ILCS 5/15.1)  (from Ch. 17, par. 1685.1)
12    Sec. 15.1. Trust for a beneficiary with a disability.
13    (a) A discretionary trust for the benefit of an individual
14who has a disability that substantially impairs the
15individual's ability to provide for his or her own care or
16custody and constitutes a substantial disability shall not be
17liable to pay or reimburse the State or any public agency for
18financial aid or services to the individual except to the
19extent the trust was created by the individual or trust
20property has been distributed directly to or is otherwise under
21the control of the individual, provided that such exception
22shall not apply to a trust created with the property of the
23individual with a disability or property within his or her
24control if the trust complies with Medicaid reimbursement



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1requirements of federal law. Notwithstanding any other
2provisions to the contrary, a trust created with the property
3of the individual with a disability or property within his or
4her control shall be liable, after reimbursement of Medicaid
5expenditures, to the State for reimbursement of any other
6service charges outstanding at the death of the individual with
7a disability. Property, goods and services purchased or owned
8by a trust for and used or consumed by a beneficiary with a
9disability shall not be considered trust property distributed
10to or under the control of the beneficiary. A discretionary
11trust is one in which the trustee has discretionary power to
12determine distributions to be made under the trust.
13    (b) The court or a person with a disability may irrevocably
14assign resources of that person to either or both of: (i) an
15ABLE account, as defined under Section 16.6 of the State
16Treasurer Act; or (ii) a discretionary trust that complies with
17the Medicaid reimbursement requirements of federal law. As used
18in this subsection, "resources" includes, but is not limited
19to, any interest in real or personal property, judgment,
20settlement, annuity, maintenance, minor child support, and
21support for non-minor children. Assignment is not authorized if
22otherwise prohibited by law. A court may reserve the right to
23determine the amount, duration, or enforcement of the
24irrevocable assignment.
25(Source: P.A. 99-143, eff. 7-27-15.)



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1    Section 99. Effective date. This Act takes effect upon
2becoming law.".