Full Text of HB4937 102nd General Assembly
HB4937eng 102ND 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 16.6 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 | 10 | | for the purpose of financing certain qualified expenses of | 11 | | eligible individuals as specifically provided for in this | 12 | | Section and authorized by Section 529A of the Internal Revenue | 13 | | Code. | 14 | | "ABLE account plan" or "plan" means the savings account | 15 | | plan provided for in this Section. | 16 | | "Account administrator" means the person or entity | 17 | | selected by the State Treasurer to administer the daily | 18 | | operations of the ABLE account plan and provide marketing, | 19 | | recordkeeping, investment management, and other services for | 20 | | the plan. | 21 | | "Aggregate account balance" means the amount in an account | 22 | | on a particular date or the fair market value of an account on | 23 | | a particular date. |
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| 1 | | "Beneficiary" or "designated beneficiary" means the ABLE | 2 | | account owner. | 3 | | "Contracting state" means a state without a qualified ABLE | 4 | | program which has entered into a contract with Illinois to | 5 | | provide residents of the contracting state access to a | 6 | | qualified ABLE program. | 7 | | "Designated representative" means a person or entity who | 8 | | is authorized to act on behalf of a "designated beneficiary". | 9 | | A designated beneficiary is authorized to act on his or her own | 10 | | behalf unless the designated beneficiary is a minor or the | 11 | | designated beneficiary has been adjudicated to have a | 12 | | disability so that a guardian has been appointed. A designated | 13 | | representative acts in a fiduciary capacity to the designated | 14 | | beneficiary. A person or entity seeking to open an ABLE | 15 | | account on behalf of a designated beneficiary must provide | 16 | | certification, subject to penalties of perjury, of the basis | 17 | | for the person's or entity's authority to act as a designated | 18 | | representative and that there is no other person or entity | 19 | | with higher priority to establish the ABLE account under | 20 | | Section 529A of the Internal Revenue Code and federal | 21 | | regulations. The State Treasurer shall recognize the following | 22 | | as a designated representative without appointment by a court: | 23 | | (1) The designated beneficiary's guardian of the | 24 | | person, plenary guardian of the estate, limited guardian | 25 | | of financial or contractual matters, or any other | 26 | | State-appointed guardian. A guardian acting in this |
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| 1 | | capacity shall not be required to seek court approval for | 2 | | any ABLE account activity. | 3 | | (2) The agent named by the designated beneficiary in a | 4 | | property power of attorney recognized as a statutory short | 5 | | form power of attorney for property. | 6 | | (3) Such individual or entity that the designated | 7 | | beneficiary so designates in writing, in a manner to be | 8 | | established by the State Treasurer. | 9 | | (4) Such other individual or entity designated by the | 10 | | State Treasurer pursuant to its rules. | 11 | | "Disability certification" has the meaning given to that | 12 | | term under Section 529A of the Internal Revenue Code. | 13 | | "Eligible individual" has the meaning given to that term | 14 | | under Section 529A of the Internal Revenue Code. | 15 | | "Internal Revenue Code" means the federal Internal Revenue | 16 | | Code. | 17 | | "Participation agreement" means an agreement to | 18 | | participate in the ABLE account plan between a designated | 19 | | beneficiary and the State, through its agencies and the State | 20 | | Treasurer. | 21 | | "Qualified disability expenses" has the meaning given to | 22 | | that term under Section 529A of the Internal Revenue Code. | 23 | | "Qualified withdrawal" or "qualified distribution" means a | 24 | | withdrawal from an ABLE account to pay the qualified | 25 | | disability expenses of the beneficiary of the account. | 26 | | (b) Establishment of the ABLE Program. The "Achieving a |
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| 1 | | Better Life Experience" or "ABLE" account program is hereby | 2 | | created and shall be administered by the State Treasurer. The | 3 | | purpose of the ABLE program is to encourage and assist | 4 | | individuals and families in saving private funds for the | 5 | | purpose of supporting individuals with disabilities to | 6 | | maintain health, independence, and quality of life, and to | 7 | | provide secure funding for disability-related expenses on | 8 | | behalf of designated beneficiaries with disabilities that will | 9 | | supplement, but not supplant, benefits provided through | 10 | | private insurance, federal and State medical and disability | 11 | | insurance, the beneficiary's employment, and other sources. | 12 | | Under the plan, a person may make contributions to an ABLE | 13 | | account to meet the qualified disability expenses of the | 14 | | designated beneficiary of the account. The plan must be | 15 | | operated as an accounts-type plan that permits persons to save | 16 | | for qualified disability expenses incurred by or on behalf of | 17 | | an eligible individual. | 18 | | (c) Promotion of the ABLE Program. The State Treasurer | 19 | | shall promote awareness of the availability and advantages of | 20 | | the ABLE account plan as a way to assist individuals and | 21 | | families in saving private funds for the purpose of supporting | 22 | | individuals with disabilities. | 23 | | (d) Availability of the ABLE Program. An ABLE account may | 24 | | be established under this Section for a designated beneficiary | 25 | | who is a resident of Illinois, a resident of a contracting | 26 | | state, or a resident of any other state. |
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| 1 | | Annual contributions to an ABLE account on behalf of a | 2 | | beneficiary are subject to the requirements of subsection (b) | 3 | | of Section 529A of the Internal Revenue Code. No person may | 4 | | make a contribution to an ABLE account if such a contribution | 5 | | would result in the aggregate account balance of an ABLE | 6 | | account exceeding the account balance limit authorized under | 7 | | Section 529A of the Internal Revenue Code. The Treasurer shall | 8 | | review the contribution limit at least annually. A separate | 9 | | account must be maintained for each beneficiary for whom | 10 | | contributions are made, and no more than one account shall be | 11 | | established per beneficiary. If an ABLE account is established | 12 | | for a designated beneficiary, no account subsequently | 13 | | established for such beneficiary shall be treated as an ABLE | 14 | | account. The preceding sentence shall not apply in the case of | 15 | | an ABLE account established for purposes of a rollover as | 16 | | permitted under Sections 529 and 529A of the Internal Revenue | 17 | | Code. | 18 | | (e) Administration of the ABLE Program. The State | 19 | | Treasurer shall administer the plan, including accepting and | 20 | | processing applications, maintaining account records, making | 21 | | payments, and undertaking any other necessary tasks to | 22 | | administer the plan, including the appointment of an account | 23 | | administrator. The State Treasurer may contract with one or | 24 | | more third parties to carry out some or all of these | 25 | | administrative duties, including, but not limited to, | 26 | | providing investment management services, incentives, and |
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| 1 | | marketing the plan. The State Treasurer may enter into | 2 | | agreements with other states to either allow Illinois | 3 | | residents to participate in a plan operated by another state | 4 | | or to allow residents of other states to participate in the | 5 | | Illinois ABLE plan . The State Treasurer may require any | 6 | | certifications that he or she deems necessary to implement the | 7 | | Program, including oaths or affirmations made under penalties | 8 | | of perjury . | 9 | | (f) Fees. The State Treasurer may establish fees to be | 10 | | imposed on participants to cover the costs of administration, | 11 | | recordkeeping, and investment management. The State Treasurer | 12 | | must use his or her best efforts to keep these fees as low as | 13 | | possible, consistent with efficient administration. | 14 | | (g) The Illinois ABLE Accounts Administrative Fund. The | 15 | | Illinois ABLE Accounts Administrative Fund is created as a | 16 | | nonappropriated trust fund in the State treasury. The State | 17 | | Treasurer shall use moneys in the Administrative Fund to cover | 18 | | administrative expenses incurred under this Section. The | 19 | | Administrative Fund may receive any grants or other moneys | 20 | | designated for administrative purposes from the State, or any | 21 | | unit of federal, state, or local government, or any other | 22 | | person, firm, partnership, or corporation. Any interest | 23 | | earnings that are attributable to moneys in the Administrative | 24 | | Fund must be deposited into the Administrative Fund. Any fees | 25 | | established by the State Treasurer to cover the costs of | 26 | | administration, recordkeeping, and investment management shall |
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| 1 | | be deposited into the Administrative Fund. | 2 | | Subject to appropriation, the State Treasurer may pay | 3 | | administrative costs associated with the creation and | 4 | | management of the plan until sufficient assets are available | 5 | | in the Administrative Fund for that purpose. | 6 | | (h) Privacy. Applications for accounts, designated | 7 | | beneficiary data, account data, and data on beneficiaries of | 8 | | accounts are confidential and exempt from disclosure under the | 9 | | Freedom of Information Act. | 10 | | (i) Investment Policy. The Treasurer shall prepare and | 11 | | adopt a written statement of investment policy that includes a | 12 | | risk management and oversight program which shall be reviewed | 13 | | annually and posted on the Treasurer's website prior to | 14 | | implementation. The risk management and oversight program | 15 | | shall be designed to ensure that an effective risk management | 16 | | system is in place to monitor the risk levels of the ABLE plan, | 17 | | to ensure that the risks taken are prudent and properly | 18 | | managed, to provide an integrated process for overall risk | 19 | | management, and to assess investment returns as well as risk | 20 | | to determine if the risks taken are adequately compensated | 21 | | compared to applicable performance benchmarks and standards. | 22 | | To enhance the safety and liquidity of ABLE accounts, to | 23 | | ensure the diversification of the investment portfolio of | 24 | | accounts, and in an effort to keep investment dollars in the | 25 | | State, the State Treasurer may make a percentage of each | 26 | | account available for investment in participating financial |
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| 1 | | institutions doing business in the State, except that the | 2 | | accounts may be invested without limit in investment options | 3 | | from open-ended investment companies registered under Section | 4 | | 80a of the federal Investment Company Act of 1940. The State | 5 | | Treasurer may contract with one or more third parties for | 6 | | investment management, recordkeeping, or other services in | 7 | | connection with investing the accounts. | 8 | | (j) Investment restrictions. The State Treasurer shall | 9 | | ensure that the plan meets the requirements for an ABLE | 10 | | account under Section 529A of the Internal Revenue Code. The | 11 | | State Treasurer may request a private letter ruling or rulings | 12 | | from the Internal Revenue Service and must take any necessary | 13 | | steps to ensure that the plan qualifies under relevant | 14 | | provisions of federal law. Notwithstanding the foregoing, any | 15 | | determination by the Secretary of the Treasury of the United | 16 | | States that an account was utilized to make non-qualified | 17 | | distributions shall not result in an ABLE account being | 18 | | disregarded as a resource. | 19 | | (k) Contributions. A person may make contributions to an | 20 | | ABLE account on behalf of a beneficiary. Contributions to an | 21 | | account made by persons other than the designated beneficiary | 22 | | become the property of the designated beneficiary. | 23 | | Contributions to an account shall be considered as a transfer | 24 | | of assets for fair market value. A person does not acquire an | 25 | | interest in an ABLE account by making contributions to an | 26 | | account. A contribution to any account for a beneficiary must |
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| 1 | | be rejected if the contribution would cause either the | 2 | | aggregate or annual account balance of the account to exceed | 3 | | the limits imposed by Section 529A of the Internal Revenue | 4 | | Code. | 5 | | Any change in designated beneficiary must be done in a | 6 | | manner consistent with Section 529A of the Internal Revenue | 7 | | Code. | 8 | | (l) Notice. Notice of any proposed amendments to the rules | 9 | | and regulations shall be provided to all designated | 10 | | beneficiaries or their designated representatives prior to | 11 | | adoption. Amendments to rules and regulations shall apply only | 12 | | to contributions made after the adoption of the amendment. | 13 | | Amendments to this Section automatically amend the | 14 | | participation agreement. Any amendments to the operating | 15 | | procedures and policies of the plan shall automatically amend | 16 | | the participation agreement after adoption by the State | 17 | | Treasurer. | 18 | | (m) Plan assets. All assets of the plan, including any | 19 | | contributions to accounts, are held in trust for the exclusive | 20 | | benefit of the designated beneficiary and shall be considered | 21 | | spendthrift accounts exempt from all of the designated | 22 | | beneficiary's creditors. The plan shall provide separate | 23 | | accounting for each designated beneficiary sufficient to | 24 | | satisfy the requirements of paragraph (3) of subsection (b) of | 25 | | Section 529A of the Internal Revenue Code. Assets must be held | 26 | | in either a state trust fund outside the State treasury, to be |
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| 1 | | known as the Illinois ABLE plan trust fund, or in accounts with | 2 | | a third-party provider selected pursuant to this Section. | 3 | | Amounts contributed to ABLE accounts shall not be commingled | 4 | | with State funds and the State shall have no claim to or | 5 | | against, or interest in, such funds. | 6 | | Plan assets are not subject to claims by creditors of the | 7 | | State and are not subject to appropriation by the State. | 8 | | Payments from the Illinois ABLE account plan shall be made | 9 | | under this Section. | 10 | | The assets of ABLE accounts and their income may not be | 11 | | used as security for a loan. | 12 | | (n) Taxation. The assets of ABLE accounts and their income | 13 | | and operation shall be exempt from all taxation by the State of | 14 | | Illinois and any of its subdivisions to the extent exempt from | 15 | | federal income taxation. The accrued earnings on investments | 16 | | in an ABLE account once disbursed on behalf of a designated | 17 | | beneficiary shall be similarly exempt from all taxation by the | 18 | | State of Illinois and its subdivisions to the extent exempt | 19 | | from federal income taxation, so long as they are used for | 20 | | qualified expenses. | 21 | | Notwithstanding any other provision of law that requires | 22 | | consideration of one or more financial circumstances of an | 23 | | individual, for the purpose of determining eligibility to | 24 | | receive, or the amount of, any assistance or benefit | 25 | | authorized by such provision to be provided to or for the | 26 | | benefit of such individual, any amount, including earnings |
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| 1 | | thereon, in the ABLE account of such individual, any | 2 | | contributions to the ABLE account of the individual, and any | 3 | | distribution for qualified disability expenses shall be | 4 | | disregarded for such purpose with respect to any period during | 5 | | which such individual maintains, makes contributions to, or | 6 | | receives distributions from such ABLE account. | 7 | | (o) Distributions. The designated beneficiary or the | 8 | | designated representative of the designated beneficiary may | 9 | | make a qualified distribution for the benefit of the | 10 | | designated beneficiary. Qualified distributions shall be made | 11 | | for qualified disability expenses allowed pursuant to Section | 12 | | 529A of the Internal Revenue Code. Qualified distributions | 13 | | must be withdrawn proportionally from contributions and | 14 | | earnings in a designated beneficiary's account on the date of | 15 | | distribution as provided in Section 529A of the Internal | 16 | | Revenue Code. Unless prohibited by federal law, upon the death | 17 | | of a designated beneficiary, proceeds from an account may be | 18 | | transferred to the estate of a designated beneficiary, or to | 19 | | an account for another eligible individual specified by the | 20 | | designated beneficiary or the estate of the designated | 21 | | beneficiary, or transferred pursuant to a payable on death | 22 | | account agreement. A payable on death account agreement may be | 23 | | executed by the designated beneficiary or a designated | 24 | | representative who has been granted such power. Upon the death | 25 | | of a designated beneficiary, prior to distribution of the | 26 | | balance to the estate, account for another eligible |
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| 1 | | individual, or transfer pursuant to a payable on death account | 2 | | agreement, the State Treasurer may require verification that | 3 | | the funeral and burial expenses of the designated beneficiary | 4 | | have been paid. An agency or instrumentality of the State may | 5 | | not seek payment under subsection (f) of Section 529A of the | 6 | | federal Internal Revenue Code from the account or its proceeds | 7 | | for benefits provided to a designated beneficiary. | 8 | | (p) Rules. The State Treasurer may adopt rules to carry | 9 | | out the purposes of this Section. The State Treasurer shall | 10 | | further have the power to issue peremptory rules necessary to | 11 | | ensure that ABLE accounts meet all of the requirements for a | 12 | | qualified state ABLE program under Section 529A of the | 13 | | Internal Revenue Code and any regulations issued by the | 14 | | Internal Revenue Service.
| 15 | | (Source: P.A. 101-329, eff. 8-9-19; 102-392, eff. 8-16-21.)
| 16 | | Section 99. Effective date. This Act takes effect upon | 17 | | becoming law.
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