Full Text of SB2921 100th General Assembly
SB2921eng 100TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning State government.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The State Treasurer Act is amended by changing | 5 | | Section 16.5 as follows:
| 6 | | (15 ILCS 505/16.5)
| 7 | | Sec. 16.5. College Savings Pool. | 8 | | (a) Definitions. As used in this Section: | 9 | | "Account owner" means any person or entity who has opened | 10 | | an account or to whom ownership of an account has been | 11 | | transferred, as allowed by the Internal Revenue Code, and who | 12 | | has authority to withdraw funds, direct withdrawal of funds, | 13 | | change the designated beneficiary, or otherwise exercise | 14 | | control over an account in the College Savings Pool. | 15 | | "Donor" means any person or entity who makes contributions | 16 | | to an account in the College Savings Pool. | 17 | | "Designated beneficiary" means any individual designated | 18 | | as the beneficiary of an account in the College Savings Pool by | 19 | | an account owner. A designated beneficiary must have a valid | 20 | | social security number or taxpayer identification number. In | 21 | | the case of an account established as part of a scholarship | 22 | | program permitted under Section 529 of the Internal Revenue | 23 | | Code, the designated beneficiary is any individual receiving |
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| 1 | | benefits accumulated in the account as a scholarship. | 2 | | "Nonqualified withdrawal" means a distribution from an | 3 | | account that is not used for the qualified expenses of the | 4 | | designated beneficiary. | 5 | | "Program manager" means any financial institution or | 6 | | entity lawfully doing business in the State of Illinois | 7 | | selected by the State Treasurer to oversee the recordkeeping, | 8 | | custody, customer service, investment management, and | 9 | | marketing for one or more of the programs in the College | 10 | | Savings Pool. | 11 | | "Qualified expenses" means: (i) tuition, fees, and the | 12 | | costs of books, supplies, and equipment required for enrollment | 13 | | or attendance at an eligible educational institution; (ii) | 14 | | expenses for special needs services, in the case of a special | 15 | | needs beneficiary, which are incurred in connection with such | 16 | | enrollment or attendance; (iii) certain expenses for the | 17 | | purchase of computer or peripheral equipment, as defined in | 18 | | Section 168 of the federal Internal Revenue Code (26 U.S.C. | 19 | | 168), computer software, as defined in Section 197 of the | 20 | | federal Internal Revenue Code (26 U.S.C. 197), or Internet | 21 | | access and related services, if such equipment, software, or | 22 | | services are to be used primarily by the beneficiary during any | 23 | | of the years the beneficiary is enrolled at an eligible | 24 | | educational institution, except that, such expenses shall not | 25 | | include expenses for computer software designed for sports, | 26 | | games, or hobbies, unless the software is predominantly |
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| 1 | | educational in nature; and (iv) room and board expenses | 2 | | incurred while attending an eligible educational institution | 3 | | at least half-time. "Eligible educational institutions", as | 4 | | used in this Section, means public and private colleges, junior | 5 | | colleges, graduate schools, and certain vocational | 6 | | institutions that are described in Section 481 of the Higher | 7 | | Education Act of 1965 (20 U.S.C. 1088) and that are eligible to | 8 | | participate in Department of Education student aid programs. A | 9 | | student shall be considered to be enrolled at least half-time | 10 | | if the student is enrolled for at least half the full-time | 11 | | academic workload for the course of study the student is | 12 | | pursuing as determined under the standards of the institution | 13 | | at which the student is enrolled. | 14 | | (b) Establishment of the Pool. The State Treasurer may | 15 | | establish and
administer a College Savings Pool as a qualified | 16 | | tuition program under Section 529 of the Internal Revenue Code. | 17 | | The Pool may consist of one or more college savings programs to | 18 | | supplement and enhance the investment
opportunities otherwise | 19 | | available to persons seeking to finance the costs of
higher | 20 | | education . The State Treasurer, in administering the College | 21 | | Savings
Pool, may receive , hold, and invest moneys paid into | 22 | | the Pool and perform such other actions as are necessary to | 23 | | ensure that the Pool operates as a qualified tuition program in | 24 | | accordance with Section 529 of the Internal Revenue Code pool | 25 | | by a participant and may serve as
the fiscal agent of that | 26 | | participant for the purpose of holding and investing
those |
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| 1 | | moneys .
| 2 | | (c) Administration of the College Savings Pool. The State | 3 | | Treasurer may engage one or more financial institutions to | 4 | | handle the overall administration, investment management, | 5 | | recordkeeping, and marketing of the programs in the College | 6 | | Savings Pool. The contributions deposited in the Pool, and any | 7 | | earnings thereon, shall not constitute property of the State or | 8 | | be commingled with State funds and the State shall have no | 9 | | claim to or against, or interest in, such funds. | 10 | | "Participant", as used in this Section, means any person | 11 | | who has authority to withdraw funds, change the designated | 12 | | beneficiary, or otherwise exercise control over an account. | 13 | | "Donor", as used in this Section, means any person who makes
| 14 | | investments in the pool. "Designated beneficiary", as used in | 15 | | this Section,
means any person on whose behalf an account is | 16 | | established in the College
Savings Pool by a participant. Both | 17 | | in-state and out-of-state persons may be
participants, donors, | 18 | | and designated beneficiaries in the College Savings Pool. The | 19 | | College Savings Pool must be available to any individual with a | 20 | | valid social security number or taxpayer identification number | 21 | | for the benefit of any individual with a valid social security | 22 | | number or taxpayer identification number, unless a contract in | 23 | | effect on August 1, 2011 (the effective date of Public Act | 24 | | 97-233) does not allow for taxpayer identification numbers, in | 25 | | which case taxpayer identification numbers must be allowed upon | 26 | | the expiration of the contract.
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| 1 | | New accounts in the College Savings Pool may be processed | 2 | | through
participating financial institutions. "Participating | 3 | | financial institution",
as used in this Section, means any | 4 | | financial institution insured by the Federal
Deposit Insurance | 5 | | Corporation and lawfully doing business in the State of
| 6 | | Illinois and any credit union approved by the State Treasurer | 7 | | and lawfully
doing business in the State of Illinois that | 8 | | agrees to process new accounts in
the College Savings Pool. | 9 | | Participating financial institutions may charge a
processing | 10 | | fee to participants to open an account in the pool that shall | 11 | | not
exceed $30 until the year 2001. Beginning in 2001 and every | 12 | | year thereafter,
the maximum fee limit shall be adjusted by the | 13 | | Treasurer based on the Consumer
Price Index for the North | 14 | | Central Region as published by the United States
Department of | 15 | | Labor, Bureau of Labor Statistics for the immediately preceding
| 16 | | calendar year. Every contribution received by a financial | 17 | | institution for
investment in the College Savings Pool shall be | 18 | | transferred from the financial
institution to a location | 19 | | selected by the State Treasurer within one business
day | 20 | | following the day that the funds must be made available in | 21 | | accordance with
federal law. All communications from the State | 22 | | Treasurer to participants and donors shall
reference the | 23 | | participating financial institution at which the account was
| 24 | | processed.
| 25 | | The Treasurer may invest the moneys in the College Savings | 26 | | Pool in the same
manner and in the same types of investments
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| 1 | | provided for the investment of moneys by the Illinois State | 2 | | Board of
Investment. | 3 | | (d) Availability of the College Savings Pool. The State | 4 | | Treasurer may permit persons, including trustees of trusts and | 5 | | custodians under a Uniform Transfers to Minors Act or Uniform | 6 | | Gifts to Minors Act account, and certain legal entities to be | 7 | | account owners, including as part of a scholarship program, | 8 | | provided that: (1) an individual, trustee or custodian must | 9 | | have a valid social security number or taxpayer identification | 10 | | number, be at least 18 years of age, and have a valid United | 11 | | States street address; and (2) a legal entity must have a valid | 12 | | taxpayer identification number and a valid United States street | 13 | | address. Both in-state and out-of-state persons may be account | 14 | | owners and donors, and both in-state and out-of-state | 15 | | individuals may be designated beneficiaries in the College | 16 | | Savings Pool. | 17 | | (e) Fees. The State Treasurer shall establish fees to be | 18 | | imposed on accounts to recover the costs of administration, | 19 | | recordkeeping, and investment management. The Treasurer must | 20 | | use his or her best efforts to keep these fees as low as | 21 | | possible and consistent with administration of high quality | 22 | | competitive college savings programs. | 23 | | (f) Investments in the State. To enhance the safety and | 24 | | liquidity of the College Savings Pool,
to ensure the | 25 | | diversification of the investment portfolio of the College | 26 | | Savings Pool pool , and in
an effort to keep investment dollars |
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| 1 | | in the State of Illinois, the State
Treasurer may make a | 2 | | percentage of each account available for investment in
| 3 | | participating financial institutions doing business in the | 4 | | State. The State
Treasurer may deposit with the participating | 5 | | financial institution at which
the account was processed the | 6 | | following percentage of each account at a
prevailing rate | 7 | | offered by the institution, provided that the deposit is
| 8 | | federally insured or fully collateralized and the institution | 9 | | accepts the
deposit: 10% of the total amount of each account | 10 | | for which the current age of
the beneficiary is less than 7 | 11 | | years of age, 20% of the total amount of each
account for which | 12 | | the beneficiary is at least 7 years of age and less than 12
| 13 | | years of age, and 50% of the total amount of each account for | 14 | | which the current
age of the beneficiary is at least 12 years | 15 | | of age.
| 16 | | (g) Investment policy. The Treasurer shall develop, | 17 | | publish, and implement an investment policy
covering the | 18 | | investment of the moneys in each of the programs in the College | 19 | | Savings Pool. The policy
shall be published each year as part
| 20 | | of the audit of the College Savings Pool by the Auditor | 21 | | General, which shall be
distributed to all account owners in | 22 | | such program participants . The Treasurer shall notify all | 23 | | account owners in such program participants
in writing, and the | 24 | | Treasurer shall publish in a newspaper of general
circulation | 25 | | in both Chicago and Springfield, any changes to the previously
| 26 | | published investment policy at least 30 calendar days before |
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| 1 | | implementing the
policy. Any investment policy adopted by the | 2 | | Treasurer shall be reviewed and
updated if necessary within 90 | 3 | | days following the date that the State Treasurer
takes office.
| 4 | | (h) Investment restrictions. An account owner may, | 5 | | directly or indirectly, direct the investment of any | 6 | | contributions to the College Savings Pool (or any earnings | 7 | | thereon) only as provided in Section 529(b)(4) of the Internal | 8 | | Revenue Code. Donors and designated beneficiaries, in those | 9 | | capacities, may not, directly or indirectly, direct the | 10 | | investment of any contributions to the Pool (or any earnings | 11 | | thereon). | 12 | | (i) Distributions. Distributions Participants shall be | 13 | | required to use moneys distributed from an account in the | 14 | | College
Savings Pool may be used for the designated | 15 | | beneficiary's qualified expenses at eligible educational | 16 | | institutions . To the extent a nonqualified withdrawal is made | 17 | | from an account, the earnings portion of such distribution may | 18 | | be treated by the Internal Revenue Service as income subject to | 19 | | income tax and a 10% federal penalty tax.
"Qualified expenses", | 20 | | as used in this Section, means the following: (i)
tuition, | 21 | | fees, and the costs of books, supplies, and equipment required | 22 | | for
enrollment or attendance at an eligible educational | 23 | | institution; (ii) expenses for special needs services, in the | 24 | | case of a special needs beneficiary, which are incurred in | 25 | | connection with such enrollment or attendance; (iii) certain | 26 | | expenses for the purchase of computer or peripheral equipment, |
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| 1 | | as defined in Section 168 of the federal Internal Revenue Code | 2 | | (26 U.S.C. 168), computer software, as defined in Section 197 | 3 | | of the federal Internal Revenue Code (26 U.S.C. 197), or | 4 | | internet access and related services, if such equipment, | 5 | | software, or services are to be used primarily by the | 6 | | beneficiary during any of the years the beneficiary is enrolled | 7 | | at an eligible educational institution, except that, such | 8 | | expenses shall not include expenses for computer software | 9 | | designed for sports, games, or hobbies, unless the software is | 10 | | predominantly educational in nature; and (iv)
certain room and | 11 | | board expenses incurred while attending an eligible
| 12 | | educational institution at least half-time. "Eligible | 13 | | educational
institutions", as used in this Section, means | 14 | | public and private colleges,
junior colleges, graduate | 15 | | schools, and certain vocational institutions that are
| 16 | | described in Section 481 of the Higher Education Act of 1965 | 17 | | (20 U.S.C. 1088)
and that are eligible to participate in | 18 | | Department of Education student aid
programs. A student shall | 19 | | be considered to be enrolled at
least half-time if the student | 20 | | is enrolled for at least half the full-time
academic work load | 21 | | for the course of study the student is pursuing as
determined | 22 | | under the standards of the institution at which the student is
| 23 | | enrolled. | 24 | | Distributions made from the College Savings Pool may pool | 25 | | for qualified expenses shall be
made directly to the eligible | 26 | | educational institution, directly to a vendor,
in the form of a |
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| 1 | | check payable to both the designated beneficiary and the | 2 | | institution or
vendor, or directly to the designated | 3 | | beneficiary or account owner, or in any other a manner that is | 4 | | permissible under Section 529 of the Internal Revenue Code. Any | 5 | | moneys that are distributed in any other manner or that are | 6 | | used
for expenses other than qualified expenses at an eligible | 7 | | educational
institution shall be subject to a penalty of 10% of | 8 | | the earnings unless the
beneficiary dies, becomes a person with | 9 | | a disability, or receives a scholarship that equals or
exceeds | 10 | | the distribution. Penalties shall be withheld at the time the
| 11 | | distribution is made.
| 12 | | (j) Contributions. Contributions to the College Savings | 13 | | Pool shall be as follows: | 14 | | (1) Contributions to an account in the College Savings | 15 | | Pool may be made only in cash. | 16 | | (2) The Treasurer shall limit the contributions that | 17 | | may be made to the College Savings Pool on behalf of a
| 18 | | designated beneficiary , as required under Section 529 of | 19 | | the Internal Revenue Code, to prevent contributions for the | 20 | | benefit of a designated beneficiary in excess of those | 21 | | necessary to provide for the qualified expenses of the | 22 | | designated beneficiary based on the limitations | 23 | | established by the Internal Revenue Service . The Pool shall | 24 | | not permit any additional contributions to an account as | 25 | | soon as the aggregate accounts for the designated | 26 | | beneficiary in the Pool reach a specified account balance |
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| 1 | | limit applicable to all designated beneficiaries. | 2 | | (3) The contributions made on behalf of a designated
| 3 | | beneficiary who is also a beneficiary under the Illinois | 4 | | Prepaid Tuition
Program shall be further restricted to | 5 | | ensure that the contributions in both
programs combined do | 6 | | not exceed the limit established for the College Savings
| 7 | | Pool. | 8 | | (k) Illinois Student Assistance Commission. The Treasurer | 9 | | shall provide the Illinois Student Assistance Commission
each | 10 | | year at a time designated by the Commission, an electronic | 11 | | report of all account owner
participant accounts in the | 12 | | Treasurer's College Savings Pool, listing total
contributions | 13 | | and disbursements from each individual account during the
| 14 | | previous calendar year. As soon thereafter as is possible | 15 | | following receipt of
the Treasurer's report, the Illinois | 16 | | Student Assistance Commission shall, in
turn, provide the | 17 | | Treasurer with an electronic report listing those College
| 18 | | Savings Pool account owners participants who also participate | 19 | | in the State's prepaid tuition
program, administered by the | 20 | | Commission. The Commission shall be responsible
for filing any | 21 | | combined tax reports regarding State qualified savings | 22 | | programs
required by the United States Internal Revenue | 23 | | Service. | 24 | | The Treasurer shall
work with the Illinois Student | 25 | | Assistance Commission to coordinate the
marketing of the | 26 | | College Savings Pool and the Illinois Prepaid Tuition
Program |
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| 1 | | when considered beneficial by the Treasurer and the Director of | 2 | | the
Illinois Student Assistance
Commission. The Treasurer's | 3 | | office shall not publicize or otherwise market the
College | 4 | | Savings Pool or accept any moneys into the College Savings Pool | 5 | | prior
to March 1, 2000. The Treasurer shall provide a separate | 6 | | accounting for each
designated beneficiary to each account | 7 | | owner participant, the Illinois Student Assistance
Commission, | 8 | | and the participating financial institution at which the | 9 | | account
was processed . | 10 | | (l) Prohibition; exemption. No interest in the program , or | 11 | | any portion thereof, may be used pledged as security for a
| 12 | | loan. Moneys held in an account invested in the Illinois | 13 | | College Savings Pool shall be exempt from all claims of the | 14 | | creditors of the account owner participant , donor, or | 15 | | designated beneficiary of that account, except for the | 16 | | non-exempt College Savings Pool transfers to or from the | 17 | | account as defined under subsection (j) of Section 12-1001 of | 18 | | the Code of Civil Procedure (735 ILCS 5/12-1001(j)) .
| 19 | | (m) Taxation. The assets of the College Savings Pool and | 20 | | its income and operation shall
be exempt from all taxation by | 21 | | the State of Illinois and any of its
subdivisions. The accrued | 22 | | earnings on investments in the Pool once disbursed
on behalf of | 23 | | a designated beneficiary shall be similarly exempt from all
| 24 | | taxation by the State of Illinois and its subdivisions, so long | 25 | | as they are
used for qualified expenses. Contributions to a | 26 | | College Savings Pool account
during the taxable year may be |
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| 1 | | deducted from adjusted gross income as provided
in Section 203 | 2 | | of the Illinois Income Tax Act. The provisions of this
| 3 | | paragraph are exempt from Section 250 of the Illinois Income | 4 | | Tax Act.
| 5 | | (n) Rules. The Treasurer shall adopt rules he or she | 6 | | considers necessary for the
efficient administration of the | 7 | | College Savings Pool. The rules shall provide
whatever | 8 | | additional parameters and restrictions are necessary to ensure | 9 | | that
the College Savings Pool meets all of the requirements for | 10 | | a qualified state
tuition program under Section 529 of the | 11 | | Internal Revenue Code (26 U.S.C. 529) .
| 12 | | The rules shall provide for the administration expenses of | 13 | | the Pool pool to be paid
from its earnings and for the | 14 | | investment earnings in excess of the expenses and
all moneys | 15 | | collected as penalties to be credited at least or paid monthly | 16 | | to the account owners several
participants in the Pool pool in | 17 | | a manner which equitably reflects the differing
amounts of | 18 | | their respective investments in the Pool pool and the differing | 19 | | periods
of time for which those amounts were in the custody of | 20 | | the Pool pool . | 21 | | The Also, the
rules shall require the maintenance of | 22 | | records that enable the Treasurer's
office to produce a report | 23 | | for each account in the Pool pool at least annually that
| 24 | | documents the account balance and investment earnings. | 25 | | Notice of any proposed
amendments to the rules and | 26 | | regulations shall be provided to all account owners |
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| 1 | | participants
prior to adoption. Amendments to rules and | 2 | | regulations shall apply only to
contributions made after the | 3 | | adoption of the amendment.
| 4 | | (o) Bond. The Upon creating the College Savings Pool, the | 5 | | State Treasurer shall give bond
with at least one surety 2 or | 6 | | more sufficient sureties , payable to and for the benefit of the
| 7 | | account owners participants in the College Savings Pool, in the | 8 | | penal sum of $10,000,000 $1,000,000 ,
conditioned upon the | 9 | | faithful discharge of his or her duties in relation to
the | 10 | | College Savings Pool.
| 11 | | (Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 91-943, | 12 | | eff. 2-9-01; 92-16, eff. 6-28-01; 92-439, eff. 8-17-01; 92-626, | 13 | | eff 7-11-02; 93-812, eff. 1-1-05; 95-23, eff. 8-3-07; 95-306, | 14 | | eff. 1-1-08; 95-521,
eff. 8-28-07; 95-876, eff. 8-21-08; | 15 | | 97-233, eff. 8-1-11; 97-537, eff. 8-23-11; 97-813, eff. | 16 | | 7-13-12; 99-143, eff. 7-27-15; 100-161, eff. 8-18-17; revised | 17 | | 10-2-17.)
| 18 | | Section 99. Effective date. This Act takes effect upon | 19 | | becoming law.
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