Illinois General Assembly - Full Text of HB4937
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Full Text of HB4937  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,
3represented in the General Assembly:
4    Section 5. The State Treasurer Act is amended by changing
5Section 16.6 as follows:
6    (15 ILCS 505/16.6)
7    Sec. 16.6. ABLE account program.
8    (a) As used in this Section:
9    "ABLE account" or "account" means an account established
10for the purpose of financing certain qualified expenses of
11eligible individuals as specifically provided for in this
12Section and authorized by Section 529A of the Internal Revenue
14    "ABLE account plan" or "plan" means the savings account
15plan provided for in this Section.
16    "Account administrator" means the person or entity
17selected by the State Treasurer to administer the daily
18operations of the ABLE account plan and provide marketing,
19recordkeeping, investment management, and other services for
20the plan.
21    "Aggregate account balance" means the amount in an account
22on a particular date or the fair market value of an account on
23a particular date.



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1    "Beneficiary" or "designated beneficiary" means the ABLE
2account owner.
3    "Contracting state" means a state without a qualified ABLE
4program which has entered into a contract with Illinois to
5provide residents of the contracting state access to a
6qualified ABLE program.
7    "Designated representative" means a person or entity who
8is authorized to act on behalf of a "designated beneficiary".
9A designated beneficiary is authorized to act on his or her own
10behalf unless the designated beneficiary is a minor or the
11designated beneficiary has been adjudicated to have a
12disability so that a guardian has been appointed. A designated
13representative acts in a fiduciary capacity to the designated
14beneficiary. A person or entity seeking to open an ABLE
15account on behalf of a designated beneficiary must provide
16certification, subject to penalties of perjury, of the basis
17for the person's or entity's authority to act as a designated
18representative and that there is no other person or entity
19with higher priority to establish the ABLE account under
20Section 529A of the Internal Revenue Code and federal
21regulations. The State Treasurer shall recognize the following
22as 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
12term under Section 529A of the Internal Revenue Code.
13    "Eligible individual" has the meaning given to that term
14under Section 529A of the Internal Revenue Code.
15    "Internal Revenue Code" means the federal Internal Revenue
17    "Participation agreement" means an agreement to
18participate in the ABLE account plan between a designated
19beneficiary and the State, through its agencies and the State
21    "Qualified disability expenses" has the meaning given to
22that term under Section 529A of the Internal Revenue Code.
23    "Qualified withdrawal" or "qualified distribution" means a
24withdrawal from an ABLE account to pay the qualified
25disability expenses of the beneficiary of the account.
26    (b) Establishment of the ABLE Program. The "Achieving a



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1Better Life Experience" or "ABLE" account program is hereby
2created and shall be administered by the State Treasurer. The
3purpose of the ABLE program is to encourage and assist
4individuals and families in saving private funds for the
5purpose of supporting individuals with disabilities to
6maintain health, independence, and quality of life, and to
7provide secure funding for disability-related expenses on
8behalf of designated beneficiaries with disabilities that will
9supplement, but not supplant, benefits provided through
10private insurance, federal and State medical and disability
11insurance, the beneficiary's employment, and other sources.
12Under the plan, a person may make contributions to an ABLE
13account to meet the qualified disability expenses of the
14designated beneficiary of the account. The plan must be
15operated as an accounts-type plan that permits persons to save
16for qualified disability expenses incurred by or on behalf of
17an eligible individual.
18    (c) Promotion of the ABLE Program. The State Treasurer
19shall promote awareness of the availability and advantages of
20the ABLE account plan as a way to assist individuals and
21families in saving private funds for the purpose of supporting
22individuals with disabilities.
23    (d) Availability of the ABLE Program. An ABLE account may
24be established under this Section for a designated beneficiary
25who is a resident of Illinois, a resident of a contracting
26state, or a resident of any other state.



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1    Annual contributions to an ABLE account on behalf of a
2beneficiary are subject to the requirements of subsection (b)
3of Section 529A of the Internal Revenue Code. No person may
4make a contribution to an ABLE account if such a contribution
5would result in the aggregate account balance of an ABLE
6account exceeding the account balance limit authorized under
7Section 529A of the Internal Revenue Code. The Treasurer shall
8review the contribution limit at least annually. A separate
9account must be maintained for each beneficiary for whom
10contributions are made, and no more than one account shall be
11established per beneficiary. If an ABLE account is established
12for a designated beneficiary, no account subsequently
13established for such beneficiary shall be treated as an ABLE
14account. The preceding sentence shall not apply in the case of
15an ABLE account established for purposes of a rollover as
16permitted under Sections 529 and 529A of the Internal Revenue
18    (e) Administration of the ABLE Program. The State
19Treasurer shall administer the plan, including accepting and
20processing applications, maintaining account records, making
21payments, and undertaking any other necessary tasks to
22administer the plan, including the appointment of an account
23administrator. The State Treasurer may contract with one or
24more third parties to carry out some or all of these
25administrative duties, including, but not limited to,
26providing investment management services, incentives, and



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1marketing the plan. The State Treasurer may enter into
2agreements with other states to either allow Illinois
3residents to participate in a plan operated by another state
4or to allow residents of other states to participate in the
5Illinois ABLE plan. The State Treasurer may require any
6certifications that he or she deems necessary to implement the
7Program, including oaths or affirmations made under penalties
8of perjury.
9    (f) Fees. The State Treasurer may establish fees to be
10imposed on participants to cover the costs of administration,
11recordkeeping, and investment management. The State Treasurer
12must use his or her best efforts to keep these fees as low as
13possible, consistent with efficient administration.
14    (g) The Illinois ABLE Accounts Administrative Fund. The
15Illinois ABLE Accounts Administrative Fund is created as a
16nonappropriated trust fund in the State treasury. The State
17Treasurer shall use moneys in the Administrative Fund to cover
18administrative expenses incurred under this Section. The
19Administrative Fund may receive any grants or other moneys
20designated for administrative purposes from the State, or any
21unit of federal, state, or local government, or any other
22person, firm, partnership, or corporation. Any interest
23earnings that are attributable to moneys in the Administrative
24Fund must be deposited into the Administrative Fund. Any fees
25established by the State Treasurer to cover the costs of
26administration, recordkeeping, and investment management shall



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1be deposited into the Administrative Fund.
2    Subject to appropriation, the State Treasurer may pay
3administrative costs associated with the creation and
4management of the plan until sufficient assets are available
5in the Administrative Fund for that purpose.
6    (h) Privacy. Applications for accounts, designated
7beneficiary data, account data, and data on beneficiaries of
8accounts are confidential and exempt from disclosure under the
9Freedom of Information Act.
10    (i) Investment Policy. The Treasurer shall prepare and
11adopt a written statement of investment policy that includes a
12risk management and oversight program which shall be reviewed
13annually and posted on the Treasurer's website prior to
14implementation. The risk management and oversight program
15shall be designed to ensure that an effective risk management
16system is in place to monitor the risk levels of the ABLE plan,
17to ensure that the risks taken are prudent and properly
18managed, to provide an integrated process for overall risk
19management, and to assess investment returns as well as risk
20to determine if the risks taken are adequately compensated
21compared to applicable performance benchmarks and standards.
22To enhance the safety and liquidity of ABLE accounts, to
23ensure the diversification of the investment portfolio of
24accounts, and in an effort to keep investment dollars in the
25State, the State Treasurer may make a percentage of each
26account available for investment in participating financial



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1institutions doing business in the State, except that the
2accounts may be invested without limit in investment options
3from open-ended investment companies registered under Section
480a of the federal Investment Company Act of 1940. The State
5Treasurer may contract with one or more third parties for
6investment management, recordkeeping, or other services in
7connection with investing the accounts.
8    (j) Investment restrictions. The State Treasurer shall
9ensure that the plan meets the requirements for an ABLE
10account under Section 529A of the Internal Revenue Code. The
11State Treasurer may request a private letter ruling or rulings
12from the Internal Revenue Service and must take any necessary
13steps to ensure that the plan qualifies under relevant
14provisions of federal law. Notwithstanding the foregoing, any
15determination by the Secretary of the Treasury of the United
16States that an account was utilized to make non-qualified
17distributions shall not result in an ABLE account being
18disregarded as a resource.
19    (k) Contributions. A person may make contributions to an
20ABLE account on behalf of a beneficiary. Contributions to an
21account made by persons other than the designated beneficiary
22become the property of the designated beneficiary.
23Contributions to an account shall be considered as a transfer
24of assets for fair market value. A person does not acquire an
25interest in an ABLE account by making contributions to an
26account. A contribution to any account for a beneficiary must



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1be rejected if the contribution would cause either the
2aggregate or annual account balance of the account to exceed
3the limits imposed by Section 529A of the Internal Revenue
5    Any change in designated beneficiary must be done in a
6manner consistent with Section 529A of the Internal Revenue
8    (l) Notice. Notice of any proposed amendments to the rules
9and regulations shall be provided to all designated
10beneficiaries or their designated representatives prior to
11adoption. Amendments to rules and regulations shall apply only
12to contributions made after the adoption of the amendment.
13Amendments to this Section automatically amend the
14participation agreement. Any amendments to the operating
15procedures and policies of the plan shall automatically amend
16the participation agreement after adoption by the State
18    (m) Plan assets. All assets of the plan, including any
19contributions to accounts, are held in trust for the exclusive
20benefit of the designated beneficiary and shall be considered
21spendthrift accounts exempt from all of the designated
22beneficiary's creditors. The plan shall provide separate
23accounting for each designated beneficiary sufficient to
24satisfy the requirements of paragraph (3) of subsection (b) of
25Section 529A of the Internal Revenue Code. Assets must be held
26in either a state trust fund outside the State treasury, to be



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1known as the Illinois ABLE plan trust fund, or in accounts with
2a third-party provider selected pursuant to this Section.
3Amounts contributed to ABLE accounts shall not be commingled
4with State funds and the State shall have no claim to or
5against, 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    (n) Taxation. The assets of ABLE accounts and their income
13and operation shall be exempt from all taxation by the State of
14Illinois and any of its subdivisions to the extent exempt from
15federal income taxation. The accrued earnings on investments
16in an ABLE account once disbursed on behalf of a designated
17beneficiary shall be similarly exempt from all taxation by the
18State of Illinois and its subdivisions to the extent exempt
19from federal income taxation, so long as they are used for
20qualified expenses.
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
25authorized by such provision to be provided to or for the
26benefit of such individual, any amount, including earnings



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1thereon, in the ABLE account of such individual, any
2contributions to the ABLE account of the individual, and any
3distribution for qualified disability expenses shall be
4disregarded for such purpose with respect to any period during
5which such individual maintains, makes contributions to, or
6receives distributions from such ABLE account.
7    (o) Distributions. The designated beneficiary or the
8designated representative of the designated beneficiary may
9make a qualified distribution for the benefit of the
10designated beneficiary. Qualified distributions shall be made
11for qualified disability expenses allowed pursuant to Section
12529A of the Internal Revenue Code. Qualified distributions
13must be withdrawn proportionally from contributions and
14earnings in a designated beneficiary's account on the date of
15distribution as provided in Section 529A of the Internal
16Revenue Code. Unless prohibited by federal law, upon the death
17of a designated beneficiary, proceeds from an account may be
18transferred to the estate of a designated beneficiary, or to
19an account for another eligible individual specified by the
20designated beneficiary or the estate of the designated
21beneficiary, or transferred pursuant to a payable on death
22account agreement. A payable on death account agreement may be
23executed by the designated beneficiary or a designated
24representative who has been granted such power. Upon the death
25of a designated beneficiary, prior to distribution of the
26balance to the estate, account for another eligible



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1individual, or transfer pursuant to a payable on death account
2agreement, the State Treasurer may require verification that
3the funeral and burial expenses of the designated beneficiary
4have been paid. An agency or instrumentality of the State may
5not seek payment under subsection (f) of Section 529A of the
6federal Internal Revenue Code from the account or its proceeds
7for benefits provided to a designated beneficiary.
8    (p) Rules. The State Treasurer may adopt rules to carry
9out the purposes of this Section. The State Treasurer shall
10further have the power to issue peremptory rules necessary to
11ensure that ABLE accounts meet all of the requirements for a
12qualified state ABLE program under Section 529A of the
13Internal Revenue Code and any regulations issued by the
14Internal 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
17becoming law.