HB3811 EngrossedLRB103 31048 DTM 57666 b HB3811 Engrossed LRB103 31048 DTM 57666 b
HB3811 Engrossed LRB103 31048 DTM 57666 b
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 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.
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
HB3811 Engrossed LRB103 31048 DTM 57666 b
HB3811 Engrossed- 2 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 2 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 2 - LRB103 31048 DTM 57666 b
1 benefits accumulated in the account as a scholarship.
2 "Eligible educational institution" means public and
3 private colleges, junior colleges, graduate schools, and
4 certain vocational institutions that are described in Section
5 1001 of the Higher Education Resource and Student Assistance
6 Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
7 and that are eligible to participate in Department of
8 Education student aid programs.
9 "Member of the family" has the same meaning ascribed to
10 that term under Section 529 of the Internal Revenue Code.
11 "Nonqualified withdrawal" means a distribution from an
12 account other than a distribution that (i) is used for the
13 qualified expenses of the designated beneficiary; (ii) results
14 from the beneficiary's death or disability; (iii) is a
15 rollover to another account in the College Savings Pool; or
16 (iv) is a rollover to an ABLE account, as defined in Section
17 16.6 of this Act, or any distribution that, within 60 days
18 after such distribution, is transferred to an ABLE account of
19 the designated beneficiary or a member of the family of the
20 designated beneficiary to the extent that the distribution,
21 when added to all other contributions made to the ABLE account
22 for the taxable year, does not exceed the limitation under
23 Section 529A(b) of the Internal Revenue Code; or (v) is a
24 rollover to a Roth IRA account to the extent permitted by
25 Section 529 of the Internal Revenue Code.
26 "Qualified expenses" means: (i) tuition, fees, and the
HB3811 Engrossed - 2 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 3 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 3 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 3 - LRB103 31048 DTM 57666 b
1 costs of books, supplies, and equipment required for
2 enrollment or attendance at an eligible educational
3 institution; (ii) expenses for special needs services, in the
4 case of a special needs beneficiary, which are incurred in
5 connection with such enrollment or attendance; (iii) certain
6 expenses, to the extent they qualify as qualified higher
7 education expenses under Section 529 of the Internal Revenue
8 Code, for the purchase of computer or peripheral equipment or
9 Internet access and related services, if such equipment,
10 software, or services are to be used primarily by the
11 beneficiary during any of the years the beneficiary is
12 enrolled at an eligible educational institution, except that,
13 such expenses shall not include expenses for computer software
14 designed for sports, games, or hobbies, unless the software is
15 predominantly educational in nature; (iv) room and board
16 expenses incurred while attending an eligible educational
17 institution at least half-time; (v) expenses for fees, books,
18 supplies, and equipment required for the participation of a
19 designated beneficiary in an apprenticeship program registered
20 and certified with the Secretary of Labor under the National
21 Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
22 principal or interest on any qualified education loan of the
23 designated beneficiary or a sibling of the designated
24 beneficiary, as allowed under Section 529 of the Internal
25 Revenue Code. A student shall be considered to be enrolled at
26 least half-time if the student is enrolled for at least half
HB3811 Engrossed - 3 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 4 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 4 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 4 - LRB103 31048 DTM 57666 b
1 the full-time academic workload for the course of study the
2 student is pursuing as determined under the standards of the
3 institution at which the student is enrolled.
4 (b) Establishment of the Pool. The State Treasurer may
5 establish and administer the College Savings Pool as a
6 qualified tuition program under Section 529 of the Internal
7 Revenue Code. The Pool may consist of one or more college
8 savings programs. The State Treasurer, in administering the
9 College Savings Pool, may: (1) receive, hold, and invest
10 moneys paid into the Pool; and (2) perform any other action he
11 or she deems necessary to administer the Pool, including any
12 other actions necessary to ensure that the Pool operates as a
13 qualified tuition program in accordance with Section 529 of
14 the Internal Revenue Code.
15 (c) Administration of the College Savings Pool. The State
16 Treasurer may delegate duties related to the College Savings
17 Pool to one or more contractors. The contributions deposited
18 in the Pool, and any earnings thereon, shall not constitute
19 property of the State or be commingled with State funds and the
20 State shall have no claim to or against, or interest in, such
21 funds; provided that the fees collected by the State Treasurer
22 in accordance with this Act, scholarship programs administered
23 by the State Treasurer, and seed funds deposited by the State
24 Treasurer under Section 16.8 of the Act are State funds.
25 (c-5) College Savings Pool Account Summaries. The State
26 Treasurer shall provide a separate accounting for each
HB3811 Engrossed - 4 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 5 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 5 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 5 - LRB103 31048 DTM 57666 b
1 designated beneficiary. The separate accounting shall be
2 provided to the account owner of the account for the
3 designated beneficiary at least annually and shall show the
4 account balance, the investment in the account, the investment
5 earnings, and the distributions from the account.
6 (d) Availability of the College Savings Pool. The State
7 Treasurer may permit persons, including trustees of trusts and
8 custodians under a Uniform Transfers to Minors Act or Uniform
9 Gifts to Minors Act account, and certain legal entities to be
10 account owners, including as part of a scholarship program,
11 provided that: (1) an individual, trustee or custodian must
12 have a valid social security number or taxpayer identification
13 number, be at least 18 years of age, and have a valid United
14 States street address; and (2) a legal entity must have a valid
15 taxpayer identification number and a valid United States
16 street address. In-state and out-of-state persons, trustees,
17 custodians, and legal entities may be account owners and
18 donors, and both in-state and out-of-state individuals may be
19 designated beneficiaries in the College Savings Pool.
20 (e) Fees. Any fees, costs, and expenses, including
21 investment fees and expenses and payments to third parties,
22 related to the College Savings Pool, shall be paid from the
23 assets of the College Savings Pool. The State Treasurer shall
24 establish fees to be imposed on accounts to cover such fees,
25 costs, and expenses, to the extent not paid directly out of the
26 investments of the College Savings Pool, and to maintain an
HB3811 Engrossed - 5 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 6 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 6 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 6 - LRB103 31048 DTM 57666 b
1 adequate reserve fund in line with industry standards for
2 government operated funds. The Treasurer must use his or her
3 best efforts to keep these fees as low as possible and
4 consistent with administration of high quality competitive
5 college savings programs.
6 (f) Investments in the State. To enhance the safety and
7 liquidity of the College Savings Pool, to ensure the
8 diversification of the investment portfolio of the College
9 Savings Pool, and in an effort to keep investment dollars in
10 the State of Illinois, the State Treasurer may make a
11 percentage of each account available for investment in
12 participating financial institutions doing business in the
13 State.
14 (g) Investment policy. The Treasurer shall develop,
15 publish, and implement an investment policy covering the
16 investment of the moneys in each of the programs in the College
17 Savings Pool. The policy shall be published each year as part
18 of the audit of the College Savings Pool by the Auditor
19 General, which shall be distributed to all account owners in
20 such program. The Treasurer shall notify all account owners in
21 such program in writing, and the Treasurer shall publish in a
22 newspaper of general circulation in both Chicago and
23 Springfield, any changes to the previously published
24 investment policy at least 30 calendar days before
25 implementing the policy. Any investment policy adopted by the
26 Treasurer shall be reviewed and updated if necessary within 90
HB3811 Engrossed - 6 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 7 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 7 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 7 - LRB103 31048 DTM 57666 b
1 days following the date that the State Treasurer takes office.
2 (h) Investment restrictions. An account owner may,
3 directly or indirectly, direct the investment of his or her
4 account only as provided in Section 529(b)(4) of the Internal
5 Revenue Code. Donors and designated beneficiaries, in those
6 capacities, may not, directly or indirectly, direct the
7 investment of an account.
8 (i) Distributions. Distributions from an account in the
9 College Savings Pool may be used for the designated
10 beneficiary's qualified expenses, and if not used in that
11 manner, may be considered a nonqualified withdrawal. Funds
12 contained in a College Savings Pool account may be rolled over
13 into:
14 (1) an eligible ABLE account, as defined in Section
15 16.6 of this Act to the extent permitted by Section 529 of
16 the Internal Revenue Code; , or
17 (2) another qualified tuition program, to the extent
18 permitted by Section 529 of the Internal Revenue Code; or
19 (3) a Roth IRA account, to the extent permitted by
20 Section 529 of the Internal Revenue Code.
21 Distributions made from the College Savings Pool may be
22 made directly to the eligible educational institution,
23 directly to a vendor, in the form of a check payable to both
24 the designated beneficiary and the institution or vendor,
25 directly to the designated beneficiary or account owner, or in
26 any other manner that is permissible under Section 529 of the
HB3811 Engrossed - 7 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 8 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 8 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 8 - LRB103 31048 DTM 57666 b
1 Internal Revenue Code.
2 (j) Contributions. Contributions to the College Savings
3 Pool shall be as follows:
4 (1) Contributions to an account in the College Savings
5 Pool may be made only in cash.
6 (2) The Treasurer shall limit the contributions that
7 may be made to the College Savings Pool on behalf of a
8 designated beneficiary, as required under Section 529 of
9 the Internal Revenue Code, to prevent contributions for
10 the benefit of a designated beneficiary in excess of those
11 necessary to provide for the qualified expenses of the
12 designated beneficiary. The Pool shall not permit any
13 additional contributions to an account as soon as the sum
14 of (i) the aggregate balance in all accounts in the Pool
15 for the designated beneficiary and (ii) the aggregate
16 contributions in the Illinois Prepaid Tuition Program for
17 the designated beneficiary reaches the specified balance
18 limit established from time to time by the Treasurer.
19 (k) Illinois Student Assistance Commission. The Treasurer
20 and the Illinois Student Assistance Commission shall each
21 cooperate in providing each other with account information, as
22 necessary, to prevent contributions in excess of those
23 necessary to provide for the qualified expenses of the
24 designated beneficiary, as described in subsection (j).
25 The Treasurer shall work with the Illinois Student
26 Assistance Commission to coordinate the marketing of the
HB3811 Engrossed - 8 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 9 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 9 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 9 - LRB103 31048 DTM 57666 b
1 College Savings Pool and the Illinois Prepaid Tuition Program
2 when considered beneficial by the Treasurer and the Director
3 of the Illinois Student Assistance Commission.
4 (l) Prohibition; exemption. No interest in the program, or
5 any portion thereof, may be used as security for a loan. Moneys
6 held in an account invested in the College Savings Pool shall
7 be exempt from all claims of the creditors of the account
8 owner, donor, or designated beneficiary of that account,
9 except for the non-exempt College Savings Pool transfers to or
10 from the account as defined under subsection (j) of Section
11 12-1001 of the Code of Civil Procedure.
12 (m) Taxation. The assets of the College Savings Pool and
13 its income and operation shall be exempt from all taxation by
14 the State of Illinois and any of its subdivisions. The accrued
15 earnings on investments in the Pool once disbursed on behalf
16 of a designated beneficiary shall be similarly exempt from all
17 taxation by the State of Illinois and its subdivisions, so
18 long as they are used for qualified expenses. Contributions to
19 a College Savings Pool account during the taxable year may be
20 deducted from adjusted gross income as provided in Section 203
21 of the Illinois Income Tax Act. The provisions of this
22 paragraph are exempt from Section 250 of the Illinois Income
23 Tax Act.
24 (n) Rules. The Treasurer shall adopt rules he or she
25 considers necessary for the efficient administration of the
26 College Savings Pool. The rules shall provide whatever
HB3811 Engrossed - 9 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 10 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 10 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 10 - LRB103 31048 DTM 57666 b
1 additional parameters and restrictions are necessary to ensure
2 that the College Savings Pool meets all the requirements for a
3 qualified tuition program under Section 529 of the Internal
4 Revenue Code.
5 Notice of any proposed amendments to the rules and
6 regulations shall be provided to all account owners prior to
7 adoption.
8 (o) Bond. The State Treasurer shall give bond with at
9 least one surety, payable to and for the benefit of the account
10 owners in the College Savings Pool, in the penal sum of
11 $10,000,000, conditioned upon the faithful discharge of his or
12 her duties in relation to the College Savings Pool.
13 (p) The changes made to subsections (c) and (e) of this
14 Section by Public Act 101-26 are intended to be a restatement
15 and clarification of existing law.
16 (Source: P.A. 101-26, eff. 6-21-19; 101-81, eff. 7-12-19;
17 102-186, eff. 7-30-21.)
18 (15 ILCS 505/16.6)
19 Sec. 16.6. ABLE account program.
20 (a) As used in this Section:
21 "ABLE account" or "account" means an account established
22 for the purpose of financing certain qualified expenses of
23 eligible individuals as specifically provided for in this
24 Section and authorized by Section 529A of the Internal Revenue
25 Code.
HB3811 Engrossed - 10 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 11 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 11 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 11 - LRB103 31048 DTM 57666 b
1 "ABLE account plan" or "plan" means the savings account
2 plan provided for in this Section.
3 "Account administrator" means the person or entity
4 selected by the State Treasurer to administer the daily
5 operations of the ABLE account plan and provide marketing,
6 recordkeeping, investment management, and other services for
7 the plan.
8 "Aggregate account balance" means the amount in an account
9 on a particular date or the fair market value of an account on
10 a particular date.
11 "Beneficiary" or "designated beneficiary" means the ABLE
12 account owner.
13 "Contracting state" means a state without a qualified ABLE
14 program which has entered into a contract with Illinois to
15 provide residents of the contracting state access to a
16 qualified ABLE program.
17 "Designated representative" means a person or entity who
18 is authorized to act on behalf of a "designated beneficiary".
19 A designated beneficiary is authorized to act on his or her own
20 behalf unless the designated beneficiary is a minor or the
21 designated beneficiary has been adjudicated to have a
22 disability so that a guardian has been appointed. A designated
23 representative acts in a fiduciary capacity to the designated
24 beneficiary. A person or entity seeking to open an ABLE
25 account on behalf of a designated beneficiary must provide
26 certification, subject to penalties of perjury, of the basis
HB3811 Engrossed - 11 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 12 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 12 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 12 - LRB103 31048 DTM 57666 b
1 for the person's or entity's authority to act as a designated
2 representative and that there is no other person or entity
3 with higher priority to establish the ABLE account under
4 Section 529A of the Internal Revenue Code and federal
5 regulations.
6 "Disability certification" has the meaning given to that
7 term under Section 529A of the Internal Revenue Code.
8 "Eligible individual" has the meaning given to that term
9 under Section 529A of the Internal Revenue Code.
10 "Internal Revenue Code" means the federal Internal Revenue
11 Code.
12 "Participation agreement" means an agreement to
13 participate in the ABLE account plan between a designated
14 beneficiary and the State, through its agencies and the State
15 Treasurer.
16 "Qualified disability expenses" has the meaning given to
17 that term under Section 529A of the Internal Revenue Code.
18 "Qualified withdrawal" or "qualified distribution" means a
19 withdrawal from an ABLE account to pay the qualified
20 disability expenses of the beneficiary of the account.
21 (b) Establishment of the ABLE Program. The "Achieving a
22 Better Life Experience" or "ABLE" account program is hereby
23 created and shall be administered by the State Treasurer. The
24 purpose of the ABLE program is to encourage and assist
25 individuals and families in saving private funds for the
26 purpose of supporting individuals with disabilities to
HB3811 Engrossed - 12 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 13 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 13 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 13 - LRB103 31048 DTM 57666 b
1 maintain health, independence, and quality of life, and to
2 provide secure funding for disability-related expenses on
3 behalf of designated beneficiaries with disabilities that will
4 supplement, but not supplant, benefits provided through
5 private insurance, federal and State medical and disability
6 insurance, the beneficiary's employment, and other sources.
7 Under the plan, a person or entity may make contributions to an
8 ABLE account to meet the qualified disability expenses of the
9 designated beneficiary of the account. The plan must be
10 operated as an accounts-type plan that permits saving persons
11 to save for qualified disability expenses incurred by or on
12 behalf of an eligible individual.
13 (c) Promotion of the ABLE Program. The State Treasurer
14 shall promote awareness of the availability and advantages of
15 the ABLE account plan as a way to assist individuals and
16 families in saving private funds for the purpose of supporting
17 individuals with disabilities.
18 (d) Availability of the ABLE Program. An ABLE account may
19 be established under this Section for a designated beneficiary
20 who is a resident of Illinois, a resident of a contracting
21 state, or a resident of any other state.
22 Annual contributions to an ABLE account on behalf of a
23 beneficiary are subject to the requirements of subsection (b)
24 of Section 529A of the Internal Revenue Code. No person or
25 entity may make a contribution to an ABLE account if such a
26 contribution would result in the aggregate account balance of
HB3811 Engrossed - 13 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 14 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 14 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 14 - LRB103 31048 DTM 57666 b
1 an ABLE account exceeding the account balance limit authorized
2 under Section 529A of the Internal Revenue Code. The Treasurer
3 shall review the contribution limit at least annually. A
4 separate account must be maintained for each beneficiary for
5 whom contributions are made, and no more than one account
6 shall be established per beneficiary. If an ABLE account is
7 established for a designated beneficiary, no account
8 subsequently established for such beneficiary shall be treated
9 as an ABLE account. The preceding sentence shall not apply in
10 the case of an ABLE account established for purposes of a
11 rollover as permitted under Sections 529 and 529A of the
12 Internal Revenue Code.
13 (e) Administration of the ABLE Program. The State
14 Treasurer shall administer the plan, including accepting and
15 processing applications, maintaining account records, making
16 payments, and undertaking any other necessary tasks to
17 administer the plan, including the appointment of an account
18 administrator. The State Treasurer may contract with one or
19 more third parties to carry out some or all of these
20 administrative duties, including, but not limited to,
21 providing investment management services, incentives, and
22 marketing the plan. The State Treasurer may enter into
23 agreements with other states to either allow Illinois
24 residents to participate in a plan operated by another state
25 or to allow residents of other states to participate in the
26 Illinois ABLE plan. The State Treasurer may require any
HB3811 Engrossed - 14 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 15 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 15 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 15 - LRB103 31048 DTM 57666 b
1 certifications that he or she deems necessary to implement the
2 program, including oaths or affirmations made under penalties
3 of perjury.
4 (f) Fees. The State Treasurer may establish fees to be
5 imposed on participants to cover the costs of administration,
6 recordkeeping, and investment management. The State Treasurer
7 must use his or her best efforts to keep these fees as low as
8 possible, consistent with efficient administration.
9 (g) The Illinois ABLE Accounts Administrative Fund. The
10 Illinois ABLE Accounts Administrative Fund is created as a
11 nonappropriated trust fund in the State treasury. The State
12 Treasurer shall use moneys in the Administrative Fund to cover
13 administrative expenses incurred under this Section. The
14 Administrative Fund may receive any grants or other moneys
15 designated for administrative purposes from the State, or any
16 unit of federal, state, or local government, or any other
17 person, firm, partnership, or corporation. Any interest
18 earnings that are attributable to moneys in the Administrative
19 Fund must be deposited into the Administrative Fund. Any fees
20 established by the State Treasurer to cover the costs of
21 administration, recordkeeping, and investment management shall
22 be deposited into the Administrative Fund.
23 Subject to appropriation, the State Treasurer may pay
24 administrative costs associated with the creation and
25 management of the plan until sufficient assets are available
26 in the Administrative Fund for that purpose.
HB3811 Engrossed - 15 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 16 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 16 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 16 - LRB103 31048 DTM 57666 b
1 (h) Privacy. Applications for accounts and other records
2 obtained or compiled by the Treasurer or the Treasurer's
3 agents reflecting , designated beneficiary information data,
4 account information data, or designated representative
5 information and data on beneficiaries of accounts are
6 confidential and exempt from disclosure under the Freedom of
7 Information Act.
8 (i) Investment Policy. The Treasurer shall prepare and
9 adopt a written statement of investment policy that includes a
10 risk management and oversight program which shall be reviewed
11 annually and posted on the Treasurer's website prior to
12 implementation. The risk management and oversight program
13 shall be designed to ensure that an effective risk management
14 system is in place to monitor the risk levels of the ABLE plan,
15 to ensure that the risks taken are prudent and properly
16 managed, to provide an integrated process for overall risk
17 management, and to assess investment returns as well as risk
18 to determine if the risks taken are adequately compensated
19 compared to applicable performance benchmarks and standards.
20 To enhance the safety and liquidity of ABLE accounts, to
21 ensure the diversification of the investment portfolio of
22 accounts, and in an effort to keep investment dollars in the
23 State, the State Treasurer may make a percentage of each
24 account available for investment in participating financial
25 institutions doing business in the State, except that the
26 accounts may be invested without limit in investment options
HB3811 Engrossed - 16 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 17 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 17 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 17 - LRB103 31048 DTM 57666 b
1 from open-ended investment companies registered under Section
2 80a of the federal Investment Company Act of 1940. The State
3 Treasurer may contract with one or more third parties for
4 investment management, recordkeeping, or other services in
5 connection with investing the accounts.
6 (j) Investment restrictions. The State Treasurer shall
7 ensure that the plan meets the requirements for an ABLE
8 account under Section 529A of the Internal Revenue Code. The
9 State Treasurer may request a private letter ruling or rulings
10 from the Internal Revenue Service and must take any necessary
11 steps to ensure that the plan qualifies under relevant
12 provisions of federal law. Notwithstanding the foregoing, any
13 determination by the Secretary of the Treasury of the United
14 States that an account was utilized to make non-qualified
15 distributions shall not result in an ABLE account being
16 disregarded as a resource.
17 (k) Contributions. A person or entity may make
18 contributions to an ABLE account on behalf of a beneficiary.
19 Contributions to an account made by persons or entities other
20 than the designated beneficiary become the property of the
21 designated beneficiary. Contributions to an account shall be
22 considered as a transfer of assets for fair market value. A
23 person or entity does not acquire an interest in an ABLE
24 account by making contributions to an account. A contribution
25 to any account for a beneficiary must be rejected if the
26 contribution would cause either the aggregate or annual
HB3811 Engrossed - 17 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 18 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 18 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 18 - LRB103 31048 DTM 57666 b
1 account balance of the account to exceed the limits imposed by
2 Section 529A of the Internal Revenue Code.
3 Any change in designated beneficiary must be done in a
4 manner consistent with Section 529A of the Internal Revenue
5 Code.
6 (l) Notice. Notice of any proposed amendments to the rules
7 and regulations shall be provided to all designated
8 beneficiaries or their designated representatives prior to
9 adoption. Amendments to rules and regulations shall apply only
10 to contributions made after the adoption of the amendment.
11 Amendments to this Section automatically amend the
12 participation agreement. Any amendments to the operating
13 procedures and policies of the plan shall automatically amend
14 the participation agreement after adoption by the State
15 Treasurer.
16 (m) Plan assets. All assets of the plan, including any
17 contributions to accounts, are held in trust for the exclusive
18 benefit of the designated beneficiary and shall be considered
19 spendthrift accounts exempt from all of the designated
20 beneficiary's creditors. The plan shall provide separate
21 accounting for each designated beneficiary sufficient to
22 satisfy the requirements of paragraph (3) of subsection (b) of
23 Section 529A of the Internal Revenue Code. Assets must be held
24 in either a state trust fund outside the State treasury, to be
25 known as the Illinois ABLE plan trust fund, or in accounts with
26 a third-party provider selected pursuant to this Section.
HB3811 Engrossed - 18 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 19 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 19 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 19 - LRB103 31048 DTM 57666 b
1 Amounts contributed to ABLE accounts shall not be commingled
2 with State funds and the State shall have no claim to or
3 against, or interest in, such funds.
4 Plan assets are not subject to claims by creditors of the
5 State and are not subject to appropriation by the State.
6 Payments from the Illinois ABLE account plan shall be made
7 under this Section.
8 The assets of ABLE accounts and their income may not be
9 used as security for a loan.
10 (n) Taxation. The assets of ABLE accounts and their income
11 and operation shall be exempt from all taxation by the State of
12 Illinois and any of its subdivisions to the extent exempt from
13 federal income taxation. The accrued earnings on investments
14 in an ABLE account once disbursed on behalf of a designated
15 beneficiary shall be similarly exempt from all taxation by the
16 State of Illinois and its subdivisions to the extent exempt
17 from federal income taxation, so long as they are used for
18 qualified expenses.
19 Notwithstanding any other provision of law that requires
20 consideration of one or more financial circumstances of an
21 individual, for the purpose of determining eligibility to
22 receive, or the amount of, any assistance or benefit
23 authorized by such provision to be provided to or for the
24 benefit of such individual, any amount, including earnings
25 thereon, in the ABLE account of such individual, any
26 contributions to the ABLE account of the individual, and any
HB3811 Engrossed - 19 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 20 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 20 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 20 - LRB103 31048 DTM 57666 b
1 distribution for qualified disability expenses shall be
2 disregarded for such purpose with respect to any period during
3 which such individual maintains, makes contributions to, or
4 receives distributions from such ABLE account.
5 (o) Distributions. The designated beneficiary or the
6 designated representative of the designated beneficiary may
7 make a qualified distribution for the benefit of the
8 designated beneficiary. Qualified distributions shall be made
9 for qualified disability expenses allowed pursuant to Section
10 529A of the Internal Revenue Code. Qualified distributions
11 must be withdrawn proportionally from contributions and
12 earnings in a designated beneficiary's account on the date of
13 distribution as provided in Section 529A of the Internal
14 Revenue Code. Unless prohibited by federal law, upon the death
15 of a designated beneficiary, proceeds from an account may be
16 transferred to the estate of a designated beneficiary, or to
17 an account for another eligible individual specified by the
18 designated beneficiary or the estate of the designated
19 beneficiary, or transferred pursuant to a payable on death
20 account agreement. A payable on death account agreement may be
21 executed by the designated beneficiary or a designated
22 representative who has been granted such power. Upon the death
23 of a designated beneficiary, prior to distribution of the
24 balance to the estate, account for another eligible
25 individual, or transfer pursuant to a payable on death account
26 agreement, the State Treasurer may require verification that
HB3811 Engrossed - 20 - LRB103 31048 DTM 57666 b
HB3811 Engrossed- 21 -LRB103 31048 DTM 57666 b HB3811 Engrossed - 21 - LRB103 31048 DTM 57666 b
HB3811 Engrossed - 21 - LRB103 31048 DTM 57666 b
1 the funeral and burial expenses of the designated beneficiary
2 have been paid. An agency or instrumentality of the State may
3 not seek payment under subsection (f) of Section 529A of the
4 federal Internal Revenue Code from the account or its proceeds
5 for benefits provided to a designated beneficiary.
6 (p) Rules. The State Treasurer may adopt rules to carry
7 out the purposes of this Section. The State Treasurer shall
8 further have the power to issue peremptory rules necessary to
9 ensure that ABLE accounts meet all of the requirements for a
10 qualified state ABLE program under Section 529A of the
11 Internal Revenue Code and any regulations issued by the
12 Internal Revenue Service.
13 (q) Name. The ABLE Account Program may also be referred to
14 as the Senator Scott Bennett ABLE Program.
15 (Source: P.A. 101-329, eff. 8-9-19; 102-392, eff. 8-16-21;
16 102-1024, eff. 5-27-22.)
HB3811 Engrossed - 21 - LRB103 31048 DTM 57666 b