Full Text of HB3811 103rd General Assembly
HB3811ham001 103RD GENERAL ASSEMBLY | Rep. Kelly M. Burke Filed: 3/3/2023
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| 1 | | AMENDMENT TO HOUSE BILL 3811
| 2 | | AMENDMENT NO. ______. Amend House Bill 3811 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The State Treasurer Act is amended by changing | 5 | | Sections 16.5 and 16.6 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. |
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| 1 | | "Designated beneficiary" means any individual designated | 2 | | as the beneficiary of an account in the College Savings Pool by | 3 | | an account owner. A designated beneficiary must have a valid | 4 | | social security number or taxpayer identification number. In | 5 | | the case of an account established as part of a scholarship | 6 | | program permitted under Section 529 of the Internal Revenue | 7 | | Code, the designated beneficiary is any individual receiving | 8 | | benefits accumulated in the account as a scholarship. | 9 | | "Eligible educational institution" means public and | 10 | | private colleges, junior colleges, graduate schools, and | 11 | | certain vocational institutions that are described in Section | 12 | | 1001 of the Higher Education Resource and Student Assistance | 13 | | Chapter of Title 20 of the United States Code (20 U.S.C. 1001) | 14 | | and that are eligible to participate in Department of | 15 | | Education student aid programs. | 16 | | "Member of the family" has the same meaning ascribed to | 17 | | that term under Section 529 of the Internal Revenue Code. | 18 | | "Nonqualified withdrawal" means a distribution from an | 19 | | account other than a distribution that (i) is used for the | 20 | | qualified expenses of the designated beneficiary; (ii) results | 21 | | from the beneficiary's death or disability; (iii) is a | 22 | | rollover to another account in the College Savings Pool; or | 23 | | (iv) is a rollover to an ABLE account, as defined in Section | 24 | | 16.6 of this Act, or any distribution that, within 60 days | 25 | | after such distribution, is transferred to an ABLE account of | 26 | | the designated beneficiary or a member of the family of the |
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| 1 | | designated beneficiary to the extent that the distribution, | 2 | | when added to all other contributions made to the ABLE account | 3 | | for the taxable year, does not exceed the limitation under | 4 | | Section 529A(b) of the Internal Revenue Code ; or (v) is a | 5 | | rollover to a Roth IRA account to the extent permitted by | 6 | | Section 529 of the Internal Revenue Code . | 7 | | "Qualified expenses" means: (i) tuition, fees, and the | 8 | | costs of books, supplies, and equipment required for | 9 | | enrollment or attendance at an eligible educational | 10 | | institution; (ii) expenses for special needs services, in the | 11 | | case of a special needs beneficiary, which are incurred in | 12 | | connection with such enrollment or attendance; (iii) certain | 13 | | expenses, to the extent they qualify as qualified higher | 14 | | education expenses under Section 529 of the Internal Revenue | 15 | | Code, for the purchase of computer or peripheral equipment or | 16 | | Internet access and related services, if such equipment, | 17 | | software, or services are to be used primarily by the | 18 | | beneficiary during any of the years the beneficiary is | 19 | | enrolled at an eligible educational institution, except that, | 20 | | such expenses shall not include expenses for computer software | 21 | | designed for sports, games, or hobbies, unless the software is | 22 | | predominantly educational in nature; (iv) room and board | 23 | | expenses incurred while attending an eligible educational | 24 | | institution at least half-time; (v) expenses for fees, books, | 25 | | supplies, and equipment required for the participation of a | 26 | | designated beneficiary in an apprenticeship program registered |
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| 1 | | and certified with the Secretary of Labor under the National | 2 | | Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as | 3 | | principal or interest on any qualified education loan of the | 4 | | designated beneficiary or a sibling of the designated | 5 | | beneficiary, as allowed under Section 529 of the Internal | 6 | | Revenue Code. A student shall be considered to be enrolled at | 7 | | least half-time if the student is enrolled for at least half | 8 | | the full-time academic workload for the course of study the | 9 | | student is pursuing as determined under the standards of the | 10 | | institution at which the student is enrolled. | 11 | | (b) Establishment of the Pool. The State Treasurer may | 12 | | establish and
administer the College Savings Pool as a | 13 | | qualified tuition program under Section 529 of the Internal | 14 | | Revenue Code. The Pool may consist of one or more college | 15 | | savings programs. The State Treasurer, in administering the | 16 | | College Savings
Pool, may: (1) receive, hold, and invest | 17 | | moneys paid into the Pool; and (2) perform any other action he | 18 | | or she deems necessary to administer the Pool, including any | 19 | | other actions necessary to ensure that the Pool operates as a | 20 | | qualified tuition program in accordance with Section 529 of | 21 | | the Internal Revenue Code.
| 22 | | (c) Administration of the College Savings Pool. The State | 23 | | Treasurer may delegate duties related to the College Savings | 24 | | Pool to one or more contractors. The contributions deposited | 25 | | in the Pool, and any earnings thereon, shall not constitute | 26 | | property of the State or be commingled with State funds and the |
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| 1 | | State shall have no claim to or against, or interest in, such | 2 | | funds; provided that the fees collected by the State Treasurer | 3 | | in accordance with this Act, scholarship programs administered | 4 | | by the State Treasurer, and seed funds deposited by the State | 5 | | Treasurer under Section 16.8 of the Act are State funds.
| 6 | | (c-5) College Savings Pool Account Summaries. The State | 7 | | Treasurer shall provide a separate accounting for each | 8 | | designated beneficiary. The separate accounting shall be | 9 | | provided to the account owner of the account for the | 10 | | designated beneficiary at least annually and shall show the | 11 | | account balance, the investment in the account, the investment | 12 | | earnings, and the distributions from the account. | 13 | | (d) Availability of the College Savings Pool. The State | 14 | | Treasurer may permit persons, including trustees of trusts and | 15 | | custodians under a Uniform Transfers to Minors Act or Uniform | 16 | | Gifts to Minors Act account, and certain legal entities to be | 17 | | account owners, including as part of a scholarship program, | 18 | | provided that: (1) an individual, trustee or custodian must | 19 | | have a valid social security number or taxpayer identification | 20 | | number, be at least 18 years of age, and have a valid United | 21 | | States street address; and (2) a legal entity must have a valid | 22 | | taxpayer identification number and a valid United States | 23 | | street address. In-state and out-of-state persons, trustees, | 24 | | custodians, and legal entities may be account owners and | 25 | | donors, and both in-state and out-of-state individuals may be | 26 | | designated beneficiaries in the College Savings Pool. |
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| 1 | | (e) Fees. Any fees, costs, and expenses, including | 2 | | investment fees and expenses and payments to third parties, | 3 | | related to the College Savings Pool, shall be paid from the | 4 | | assets of the College Savings Pool. The State Treasurer shall | 5 | | establish fees to be imposed on accounts to cover such fees, | 6 | | costs, and expenses, to the extent not paid directly out of the | 7 | | investments of the College Savings Pool, and to maintain an | 8 | | adequate reserve fund in line with industry standards for | 9 | | government operated funds. The Treasurer must use his or her | 10 | | best efforts to keep these fees as low as possible and | 11 | | consistent with administration of high quality competitive | 12 | | college savings programs. | 13 | | (f) Investments in the State. To enhance the safety and | 14 | | liquidity of the College Savings Pool,
to ensure the | 15 | | diversification of the investment portfolio of the College | 16 | | Savings Pool, and in
an effort to keep investment dollars in | 17 | | the State of Illinois, the State
Treasurer may make a | 18 | | percentage of each account available for investment in
| 19 | | participating financial institutions doing business in the | 20 | | State.
| 21 | | (g) Investment policy. The Treasurer shall develop, | 22 | | publish, and implement an investment policy
covering the | 23 | | investment of the moneys in each of the programs in the College | 24 | | Savings Pool. The policy
shall be published each year as part
| 25 | | of the audit of the College Savings Pool by the Auditor | 26 | | General, which shall be
distributed to all account owners in |
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| 1 | | such program. The Treasurer shall notify all account owners in | 2 | | such program
in writing, and the Treasurer shall publish in a | 3 | | newspaper of general
circulation in both Chicago and | 4 | | Springfield, any changes to the previously
published | 5 | | investment policy at least 30 calendar days before | 6 | | implementing the
policy. Any investment policy adopted by the | 7 | | Treasurer shall be reviewed and
updated if necessary within 90 | 8 | | days following the date that the State Treasurer
takes office.
| 9 | | (h) Investment restrictions. An account owner may, | 10 | | directly or indirectly, direct the investment of his or her | 11 | | account only as provided in Section 529(b)(4) of the Internal | 12 | | Revenue Code. Donors and designated beneficiaries, in those | 13 | | capacities, may not, directly or indirectly, direct the | 14 | | investment of an account. | 15 | | (i) Distributions. Distributions from an account in the | 16 | | College
Savings Pool may be used for the designated | 17 | | beneficiary's qualified expenses, and if not used in that | 18 | | manner, may be considered a nonqualified withdrawal. Funds | 19 | | contained in a College Savings Pool account may be rolled over | 20 | | into : | 21 | | (1) an eligible ABLE account, as defined in Section | 22 | | 16.6 of this Act to the extent permitted by Section 529 of | 23 | | the Internal Revenue Code; , or | 24 | | (2) another qualified tuition program, to the extent | 25 | | permitted by Section 529 of the Internal Revenue Code ; or | 26 | | (3) a Roth IRA account, to the extent permitted by |
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| 1 | | Section 529 of the Internal Revenue Code . | 2 | | Distributions made from the College Savings Pool may be
| 3 | | made directly to the eligible educational institution, | 4 | | directly to a vendor,
in the form of a check payable to both | 5 | | the designated beneficiary and the institution or
vendor, | 6 | | directly to the designated beneficiary or account owner, or in | 7 | | any other manner that is permissible under Section 529 of the | 8 | | Internal Revenue Code.
| 9 | | (j) Contributions. Contributions to the College Savings | 10 | | Pool shall be as follows: | 11 | | (1) Contributions to an account in the College Savings | 12 | | Pool may be made only in cash. | 13 | | (2) The Treasurer shall limit the contributions that | 14 | | may be made to the College Savings Pool on behalf of a
| 15 | | designated beneficiary, as required under Section 529 of | 16 | | the Internal Revenue Code, to prevent contributions for | 17 | | the benefit of a designated beneficiary in excess of those | 18 | | necessary to provide for the qualified expenses of the | 19 | | designated beneficiary. The Pool shall not permit any | 20 | | additional contributions to an account as soon as the sum | 21 | | of (i) the aggregate balance in all accounts in the Pool | 22 | | for the designated beneficiary and (ii) the aggregate | 23 | | contributions in the Illinois Prepaid Tuition Program for | 24 | | the designated beneficiary reaches the specified balance | 25 | | limit established from time to time by the Treasurer. | 26 | | (k) Illinois Student Assistance Commission. The Treasurer |
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| 1 | | and the Illinois Student Assistance Commission shall each | 2 | | cooperate in providing each other with account information, as | 3 | | necessary, to prevent contributions in excess of those | 4 | | necessary to provide for the qualified expenses of the | 5 | | designated beneficiary, as described in subsection (j). | 6 | | The Treasurer shall
work with the Illinois Student | 7 | | Assistance Commission to coordinate the
marketing of the | 8 | | College Savings Pool and the Illinois Prepaid Tuition
Program | 9 | | when considered beneficial by the Treasurer and the Director | 10 | | of the
Illinois Student Assistance
Commission. | 11 | | (l) Prohibition; exemption. No interest in the program, or | 12 | | any portion thereof, may be used as security for a
loan. Moneys | 13 | | held in an account invested in the College Savings Pool shall | 14 | | be exempt from all claims of the creditors of the account | 15 | | owner, donor, or designated beneficiary of that account, | 16 | | except for the non-exempt College Savings Pool transfers to or | 17 | | from the account as defined under subsection (j) of Section | 18 | | 12-1001 of the Code of Civil Procedure.
| 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 | 23 | | of a designated beneficiary shall be similarly exempt from all
| 24 | | taxation by the State of Illinois and its subdivisions, so | 25 | | long as they are
used for qualified expenses. Contributions to | 26 | | a 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 the requirements for a | 10 | | qualified
tuition program under Section 529 of the Internal | 11 | | Revenue Code.
| 12 | | Notice of any proposed
amendments to the rules and | 13 | | regulations shall be provided to all account owners
prior to | 14 | | adoption.
| 15 | | (o) Bond. The State Treasurer shall give bond
with at | 16 | | least one surety, payable to and for the benefit of the
account | 17 | | owners in the College Savings Pool, in the penal sum of | 18 | | $10,000,000,
conditioned upon the faithful discharge of his or | 19 | | her duties in relation to
the College Savings Pool.
| 20 | | (p) The changes made to subsections (c) and (e) of this | 21 | | Section by Public Act 101-26 are intended to be a restatement | 22 | | and clarification of existing law. | 23 | | (Source: P.A. 101-26, eff. 6-21-19; 101-81, eff. 7-12-19; | 24 | | 102-186, eff. 7-30-21.)
| 25 | | (15 ILCS 505/16.6) |
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| 1 | | Sec. 16.6. ABLE account program. | 2 | | (a) As used in this Section: | 3 | | "ABLE account" or "account" means an account established | 4 | | for the purpose of financing certain qualified expenses of | 5 | | eligible individuals as specifically provided for in this | 6 | | Section and authorized by Section 529A of the Internal Revenue | 7 | | Code. | 8 | | "ABLE account plan" or "plan" means the savings account | 9 | | plan provided for in this Section. | 10 | | "Account administrator" means the person or entity | 11 | | selected by the State Treasurer to administer the daily | 12 | | operations of the ABLE account plan and provide marketing, | 13 | | recordkeeping, investment management, and other services for | 14 | | the plan. | 15 | | "Aggregate account balance" means the amount in an account | 16 | | on a particular date or the fair market value of an account on | 17 | | a particular date. | 18 | | "Beneficiary" or "designated beneficiary" means the ABLE | 19 | | account owner. | 20 | | "Contracting state" means a state without a qualified ABLE | 21 | | program which has entered into a contract with Illinois to | 22 | | provide residents of the contracting state access to a | 23 | | qualified ABLE program. | 24 | | "Designated representative" means a person or entity who | 25 | | is authorized to act on behalf of a "designated beneficiary". | 26 | | A designated beneficiary is authorized to act on his or her own |
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| 1 | | behalf unless the designated beneficiary is a minor or the | 2 | | designated beneficiary has been adjudicated to have a | 3 | | disability so that a guardian has been appointed. A designated | 4 | | representative acts in a fiduciary capacity to the designated | 5 | | beneficiary. A person or entity seeking to open an ABLE | 6 | | account on behalf of a designated beneficiary must provide | 7 | | certification, subject to penalties of perjury, of the basis | 8 | | for the person's or entity's authority to act as a designated | 9 | | representative and that there is no other person or entity | 10 | | with higher priority to establish the ABLE account under | 11 | | Section 529A of the Internal Revenue Code and federal | 12 | | regulations. | 13 | | "Disability certification" has the meaning given to that | 14 | | term under Section 529A of the Internal Revenue Code. | 15 | | "Eligible individual" has the meaning given to that term | 16 | | under Section 529A of the Internal Revenue Code. | 17 | | "Internal Revenue Code" means the federal Internal Revenue | 18 | | Code. | 19 | | "Participation agreement" means an agreement to | 20 | | participate in the ABLE account plan between a designated | 21 | | beneficiary and the State, through its agencies and the State | 22 | | Treasurer. | 23 | | "Qualified disability expenses" has the meaning given to | 24 | | that term under Section 529A of the Internal Revenue Code. | 25 | | "Qualified withdrawal" or "qualified distribution" means a | 26 | | withdrawal from an ABLE account to pay the qualified |
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| 1 | | disability expenses of the beneficiary of the account. | 2 | | (b) Establishment of the ABLE Program. The "Achieving a | 3 | | Better Life Experience" or "ABLE" account program is hereby | 4 | | created and shall be administered by the State Treasurer. The | 5 | | purpose of the ABLE program is to encourage and assist | 6 | | individuals and families in saving private funds for the | 7 | | purpose of supporting individuals with disabilities to | 8 | | maintain health, independence, and quality of life, and to | 9 | | provide secure funding for disability-related expenses on | 10 | | behalf of designated beneficiaries with disabilities that will | 11 | | supplement, but not supplant, benefits provided through | 12 | | private insurance, federal and State medical and disability | 13 | | insurance, the beneficiary's employment, and other sources. | 14 | | Under the plan, a person or entity may make contributions to an | 15 | | ABLE account to meet the qualified disability expenses of the | 16 | | designated beneficiary of the account. The plan must be | 17 | | operated as an accounts-type plan that permits saving persons | 18 | | to save for qualified disability expenses incurred by or on | 19 | | behalf of an eligible individual. | 20 | | (c) Promotion of the ABLE Program. The State Treasurer | 21 | | shall promote awareness of the availability and advantages of | 22 | | the ABLE account plan as a way to assist individuals and | 23 | | families in saving private funds for the purpose of supporting | 24 | | individuals with disabilities. | 25 | | (d) Availability of the ABLE Program. An ABLE account may | 26 | | be established under this Section for a designated beneficiary |
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| 1 | | who is a resident of Illinois, a resident of a contracting | 2 | | state, or a resident of any other state. | 3 | | Annual contributions to an ABLE account on behalf of a | 4 | | beneficiary are subject to the requirements of subsection (b) | 5 | | of Section 529A of the Internal Revenue Code. No person or | 6 | | entity may make a contribution to an ABLE account if such a | 7 | | contribution would result in the aggregate account balance of | 8 | | an ABLE account exceeding the account balance limit authorized | 9 | | under Section 529A of the Internal Revenue Code. The Treasurer | 10 | | shall review the contribution limit at least annually. A | 11 | | separate account must be maintained for each beneficiary for | 12 | | whom contributions are made, and no more than one account | 13 | | shall be established per beneficiary. If an ABLE account is | 14 | | established for a designated beneficiary, no account | 15 | | subsequently established for such beneficiary shall be treated | 16 | | as an ABLE account. The preceding sentence shall not apply in | 17 | | the case of an ABLE account established for purposes of a | 18 | | rollover as permitted under Sections 529 and 529A of the | 19 | | Internal Revenue Code. | 20 | | (e) Administration of the ABLE Program. The State | 21 | | Treasurer shall administer the plan, including accepting and | 22 | | processing applications, maintaining account records, making | 23 | | payments, and undertaking any other necessary tasks to | 24 | | administer the plan, including the appointment of an account | 25 | | administrator. The State Treasurer may contract with one or | 26 | | more third parties to carry out some or all of these |
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| 1 | | administrative duties, including, but not limited to, | 2 | | providing investment management services, incentives, and | 3 | | marketing the plan. The State Treasurer may enter into | 4 | | agreements with other states to either allow Illinois | 5 | | residents to participate in a plan operated by another state | 6 | | or to allow residents of other states to participate in the | 7 | | Illinois ABLE plan. The State Treasurer may require any | 8 | | certifications that he or she deems necessary to implement the | 9 | | program, including oaths or affirmations made under penalties | 10 | | of perjury. | 11 | | (f) Fees. The State Treasurer may establish fees to be | 12 | | imposed on participants to cover the costs of administration, | 13 | | recordkeeping, and investment management. The State Treasurer | 14 | | must use his or her best efforts to keep these fees as low as | 15 | | possible, consistent with efficient administration. | 16 | | (g) The Illinois ABLE Accounts Administrative Fund. The | 17 | | Illinois ABLE Accounts Administrative Fund is created as a | 18 | | nonappropriated trust fund in the State treasury. The State | 19 | | Treasurer shall use moneys in the Administrative Fund to cover | 20 | | administrative expenses incurred under this Section. The | 21 | | Administrative Fund may receive any grants or other moneys | 22 | | designated for administrative purposes from the State, or any | 23 | | unit of federal, state, or local government, or any other | 24 | | person, firm, partnership, or corporation. Any interest | 25 | | earnings that are attributable to moneys in the Administrative | 26 | | Fund must be deposited into the Administrative Fund. Any fees |
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| 1 | | established by the State Treasurer to cover the costs of | 2 | | administration, recordkeeping, and investment management shall | 3 | | be deposited into the Administrative Fund. | 4 | | Subject to appropriation, the State Treasurer may pay | 5 | | administrative costs associated with the creation and | 6 | | management of the plan until sufficient assets are available | 7 | | in the Administrative Fund for that purpose. | 8 | | (h) Privacy. Applications for accounts and other records | 9 | | obtained or compiled by the Treasurer or the Treasurer's | 10 | | agents reflecting , designated beneficiary information data , | 11 | | account information data , or designated representative | 12 | | information and data on beneficiaries of accounts are | 13 | | confidential and exempt from disclosure under the Freedom of | 14 | | Information Act. | 15 | | (i) Investment Policy. The Treasurer shall prepare and | 16 | | adopt a written statement of investment policy that includes a | 17 | | risk management and oversight program which shall be reviewed | 18 | | annually and posted on the Treasurer's website prior to | 19 | | implementation. The risk management and oversight program | 20 | | shall be designed to ensure that an effective risk management | 21 | | system is in place to monitor the risk levels of the ABLE plan, | 22 | | to ensure that the risks taken are prudent and properly | 23 | | managed, to provide an integrated process for overall risk | 24 | | management, and to assess investment returns as well as risk | 25 | | to determine if the risks taken are adequately compensated | 26 | | compared to applicable performance benchmarks and standards. |
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| 1 | | To enhance the safety and liquidity of ABLE accounts, to | 2 | | ensure the diversification of the investment portfolio of | 3 | | accounts, and in an effort to keep investment dollars in the | 4 | | State, the State Treasurer may make a percentage of each | 5 | | account available for investment in participating financial | 6 | | institutions doing business in the State, except that the | 7 | | accounts may be invested without limit in investment options | 8 | | from open-ended investment companies registered under Section | 9 | | 80a of the federal Investment Company Act of 1940. The State | 10 | | Treasurer may contract with one or more third parties for | 11 | | investment management, recordkeeping, or other services in | 12 | | connection with investing the accounts. | 13 | | (j) Investment restrictions. The State Treasurer shall | 14 | | ensure that the plan meets the requirements for an ABLE | 15 | | account under Section 529A of the Internal Revenue Code. The | 16 | | State Treasurer may request a private letter ruling or rulings | 17 | | from the Internal Revenue Service and must take any necessary | 18 | | steps to ensure that the plan qualifies under relevant | 19 | | provisions of federal law. Notwithstanding the foregoing, any | 20 | | determination by the Secretary of the Treasury of the United | 21 | | States that an account was utilized to make non-qualified | 22 | | distributions shall not result in an ABLE account being | 23 | | disregarded as a resource. | 24 | | (k) Contributions. A person or entity may make | 25 | | contributions to an ABLE account on behalf of a beneficiary. | 26 | | Contributions to an account made by persons or entities other |
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| 1 | | than the designated beneficiary become the property of the | 2 | | designated beneficiary. Contributions to an account shall be | 3 | | considered as a transfer of assets for fair market value. A | 4 | | person or entity does not acquire an interest in an ABLE | 5 | | account by making contributions to an account. A contribution | 6 | | to any account for a beneficiary must be rejected if the | 7 | | contribution would cause either the aggregate or annual | 8 | | account balance of the account to exceed the limits imposed by | 9 | | Section 529A of the Internal Revenue Code. | 10 | | Any change in designated beneficiary must be done in a | 11 | | manner consistent with Section 529A of the Internal Revenue | 12 | | Code. | 13 | | (l) Notice. Notice of any proposed amendments to the rules | 14 | | and regulations shall be provided to all designated | 15 | | beneficiaries or their designated representatives prior to | 16 | | adoption. Amendments to rules and regulations shall apply only | 17 | | to contributions made after the adoption of the amendment. | 18 | | Amendments to this Section automatically amend the | 19 | | participation agreement. Any amendments to the operating | 20 | | procedures and policies of the plan shall automatically amend | 21 | | the participation agreement after adoption by the State | 22 | | Treasurer. | 23 | | (m) Plan assets. All assets of the plan, including any | 24 | | contributions to accounts, are held in trust for the exclusive | 25 | | benefit of the designated beneficiary and shall be considered | 26 | | spendthrift accounts exempt from all of the designated |
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| 1 | | beneficiary's creditors. The plan shall provide separate | 2 | | accounting for each designated beneficiary sufficient to | 3 | | satisfy the requirements of paragraph (3) of subsection (b) of | 4 | | Section 529A of the Internal Revenue Code. Assets must be held | 5 | | in either a state trust fund outside the State treasury, to be | 6 | | known as the Illinois ABLE plan trust fund, or in accounts with | 7 | | a third-party provider selected pursuant to this Section. | 8 | | Amounts contributed to ABLE accounts shall not be commingled | 9 | | with State funds and the State shall have no claim to or | 10 | | against, or interest in, such funds. | 11 | | Plan assets are not subject to claims by creditors of the | 12 | | State and are not subject to appropriation by the State. | 13 | | Payments from the Illinois ABLE account plan shall be made | 14 | | under this Section. | 15 | | The assets of ABLE accounts and their income may not be | 16 | | used as security for a loan. | 17 | | (n) Taxation. The assets of ABLE accounts and their income | 18 | | and operation shall be exempt from all taxation by the State of | 19 | | Illinois and any of its subdivisions to the extent exempt from | 20 | | federal income taxation. The accrued earnings on investments | 21 | | in an ABLE account once disbursed on behalf of a designated | 22 | | beneficiary shall be similarly exempt from all taxation by the | 23 | | State of Illinois and its subdivisions to the extent exempt | 24 | | from federal income taxation, so long as they are used for | 25 | | qualified expenses. | 26 | | Notwithstanding any other provision of law that requires |
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| 1 | | consideration of one or more financial circumstances of an | 2 | | individual, for the purpose of determining eligibility to | 3 | | receive, or the amount of, any assistance or benefit | 4 | | authorized by such provision to be provided to or for the | 5 | | benefit of such individual, any amount, including earnings | 6 | | thereon, in the ABLE account of such individual, any | 7 | | contributions to the ABLE account of the individual, and any | 8 | | distribution for qualified disability expenses shall be | 9 | | disregarded for such purpose with respect to any period during | 10 | | which such individual maintains, makes contributions to, or | 11 | | receives distributions from such ABLE account. | 12 | | (o) Distributions. The designated beneficiary or the | 13 | | designated representative of the designated beneficiary may | 14 | | make a qualified distribution for the benefit of the | 15 | | designated beneficiary. Qualified distributions shall be made | 16 | | for qualified disability expenses allowed pursuant to Section | 17 | | 529A of the Internal Revenue Code. Qualified distributions | 18 | | must be withdrawn proportionally from contributions and | 19 | | earnings in a designated beneficiary's account on the date of | 20 | | distribution as provided in Section 529A of the Internal | 21 | | Revenue Code. Unless prohibited by federal law, upon the death | 22 | | of a designated beneficiary, proceeds from an account may be | 23 | | transferred to the estate of a designated beneficiary, or to | 24 | | an account for another eligible individual specified by the | 25 | | designated beneficiary or the estate of the designated | 26 | | beneficiary, or transferred pursuant to a payable on death |
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| 1 | | account agreement. A payable on death account agreement may be | 2 | | executed by the designated beneficiary or a designated | 3 | | representative who has been granted such power. Upon the death | 4 | | of a designated beneficiary, prior to distribution of the | 5 | | balance to the estate, account for another eligible | 6 | | individual, or transfer pursuant to a payable on death account | 7 | | agreement, the State Treasurer may require verification that | 8 | | the funeral and burial expenses of the designated beneficiary | 9 | | have been paid. An agency or instrumentality of the State may | 10 | | not seek payment under subsection (f) of Section 529A of the | 11 | | federal Internal Revenue Code from the account or its proceeds | 12 | | for benefits provided to a designated beneficiary. | 13 | | (p) Rules. The State Treasurer may adopt rules to carry | 14 | | out the purposes of this Section. The State Treasurer shall | 15 | | further have the power to issue peremptory rules necessary to | 16 | | ensure that ABLE accounts meet all of the requirements for a | 17 | | qualified state ABLE program under Section 529A of the | 18 | | Internal Revenue Code and any regulations issued by the | 19 | | Internal Revenue Service.
| 20 | | (q) Name. The ABLE Account Program may also be referred to | 21 | | as the Senator Scott Bennett ABLE Program. | 22 | | (Source: P.A. 101-329, eff. 8-9-19; 102-392, eff. 8-16-21; | 23 | | 102-1024, eff. 5-27-22.)
| 24 | | Section 99. Effective date. This Act takes effect upon | 25 | | becoming law.".
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