HB2837 EnrolledLRB101 08070 JRG 53133 b

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 16.5 as follows:
 
6    (15 ILCS 505/16.5)
7    Sec. 16.5. College Savings Pool.
8    (a) Definitions. As used in this Section:
9    "Account owner" means any person or entity who has opened
10an account or to whom ownership of an account has been
11transferred, as allowed by the Internal Revenue Code, and who
12has authority to withdraw funds, direct withdrawal of funds,
13change the designated beneficiary, or otherwise exercise
14control over an account in the College Savings Pool.
15    "Donor" means any person or entity who makes contributions
16to an account in the College Savings Pool.
17    "Designated beneficiary" means any individual designated
18as the beneficiary of an account in the College Savings Pool by
19an account owner. A designated beneficiary must have a valid
20social security number or taxpayer identification number. In
21the case of an account established as part of a scholarship
22program permitted under Section 529 of the Internal Revenue
23Code, the designated beneficiary is any individual receiving

 

 

HB2837 Enrolled- 2 -LRB101 08070 JRG 53133 b

1benefits accumulated in the account as a scholarship.
2    "Member of the family" has the same meaning ascribed to
3that term under Section 529 of the Internal Revenue Code.
4    "Nonqualified withdrawal" means a distribution from an
5account other than a distribution that (i) is used for the
6qualified expenses of the designated beneficiary; (ii) results
7from the beneficiary's death or disability; (iii) is a rollover
8to another account in the College Savings Pool; or (iv) is a
9rollover to an ABLE account, as defined in Section 16.6 of this
10Act, or any distribution that, within 60 days after such
11distribution, is transferred to an ABLE account of the
12designated beneficiary or a member of the family of the
13designated beneficiary to the extent that the distribution,
14when added to all other contributions made to the ABLE account
15for the taxable year, does not exceed the limitation under
16Section 529A(b)(2)(B)(i) of the Internal Revenue Code.
17    "Program manager" means any financial institution or
18entity lawfully doing business in the State of Illinois
19selected by the State Treasurer to oversee the recordkeeping,
20custody, customer service, investment management, and
21marketing for one or more of the programs in the College
22Savings Pool.
23    "Qualified expenses" means: (i) tuition, fees, and the
24costs of books, supplies, and equipment required for enrollment
25or attendance at an eligible educational institution; (ii)
26expenses for special needs services, in the case of a special

 

 

HB2837 Enrolled- 3 -LRB101 08070 JRG 53133 b

1needs beneficiary, which are incurred in connection with such
2enrollment or attendance; (iii) certain expenses for the
3purchase of computer or peripheral equipment, as defined in
4Section 168 of the federal Internal Revenue Code (26 U.S.C.
5168), computer software, as defined in Section 197 of the
6federal Internal Revenue Code (26 U.S.C. 197), or Internet
7access and related services, if such equipment, software, or
8services are to be used primarily by the beneficiary during any
9of the years the beneficiary is enrolled at an eligible
10educational institution, except that, such expenses shall not
11include expenses for computer software designed for sports,
12games, or hobbies, unless the software is predominantly
13educational in nature; and (iv) room and board expenses
14incurred while attending an eligible educational institution
15at least half-time. "Eligible educational institutions", as
16used in this Section, means public and private colleges, junior
17colleges, graduate schools, and certain vocational
18institutions that are described in Section 1001 481 of the
19Higher Education Resource and Student Assistance Chapter of
20Title 20 of the United States Code Act of 1965 (20 U.S.C. 1001
211088) and that are eligible to participate in Department of
22Education student aid programs. A student shall be considered
23to be enrolled at least half-time if the student is enrolled
24for at least half the full-time academic workload for the
25course of study the student is pursuing as determined under the
26standards of the institution at which the student is enrolled.

 

 

HB2837 Enrolled- 4 -LRB101 08070 JRG 53133 b

1    (b) Establishment of the Pool. The State Treasurer may
2establish and administer the a College Savings Pool as a
3qualified tuition program under Section 529 of the Internal
4Revenue Code. The Pool may consist of one or more college
5savings programs. The State Treasurer, in administering the
6College Savings Pool, may receive, hold, and invest moneys paid
7into the Pool and perform such other actions as are necessary
8to ensure that the Pool operates as a qualified tuition program
9in accordance with Section 529 of the Internal Revenue Code.
10    (c) Administration of the College Savings Pool. The State
11Treasurer may engage one or more financial institutions to
12handle the overall administration, investment management,
13recordkeeping, and marketing of the programs in the College
14Savings Pool. The contributions deposited in the Pool, and any
15earnings thereon, shall not constitute property of the State or
16be commingled with State funds and the State shall have no
17claim to or against, or interest in, such funds; provided that
18the State Treasurer may collect fees in accordance with this
19Act.
20    (c-5) The State Treasurer shall provide a separate
21accounting for each designated beneficiary. The separate
22accounting shall be provided to the account owner of the
23account for the designated beneficiary at least annually and
24shall show the account balance, the investment in the account,
25the investment earnings, and the distributions from the
26account.

 

 

HB2837 Enrolled- 5 -LRB101 08070 JRG 53133 b

1    (d) Availability of the College Savings Pool. The State
2Treasurer may permit persons, including trustees of trusts and
3custodians under a Uniform Transfers to Minors Act or Uniform
4Gifts to Minors Act account, and certain legal entities to be
5account owners, including as part of a scholarship program,
6provided that: (1) an individual, trustee or custodian must
7have a valid social security number or taxpayer identification
8number, be at least 18 years of age, and have a valid United
9States street address; and (2) a legal entity must have a valid
10taxpayer identification number and a valid United States street
11address. Both in-state and out-of-state persons may be account
12owners and donors, and both in-state and out-of-state
13individuals may be designated beneficiaries in the College
14Savings Pool.
15    (e) Fees. The State Treasurer shall establish fees to be
16imposed on accounts to cover recover the costs of
17administration, recordkeeping, and investment management. The
18Treasurer must use his or her best efforts to keep these fees
19as low as possible and consistent with administration of high
20quality competitive college savings programs. Administrative
21fees, costs, and expenses, including investment fees and
22expenses, shall be paid from the assets of the College Savings
23Pool.
24    (f) Investments in the State. To enhance the safety and
25liquidity of the College Savings Pool, to ensure the
26diversification of the investment portfolio of the College

 

 

HB2837 Enrolled- 6 -LRB101 08070 JRG 53133 b

1Savings Pool, and in an effort to keep investment dollars in
2the State of Illinois, the State Treasurer may make a
3percentage of each account available for investment in
4participating financial institutions doing business in the
5State.
6    (g) Investment policy. The Treasurer shall develop,
7publish, and implement an investment policy covering the
8investment of the moneys in each of the programs in the College
9Savings Pool. The policy shall be published each year as part
10of the audit of the College Savings Pool by the Auditor
11General, which shall be distributed to all account owners in
12such program. The Treasurer shall notify all account owners in
13such program in writing, and the Treasurer shall publish in a
14newspaper of general circulation in both Chicago and
15Springfield, any changes to the previously published
16investment policy at least 30 calendar days before implementing
17the policy. Any investment policy adopted by the Treasurer
18shall be reviewed and updated if necessary within 90 days
19following the date that the State Treasurer takes office.
20    (h) Investment restrictions. An account owner may,
21directly or indirectly, direct the investment of any
22contributions to the College Savings Pool (or any earnings
23thereon) only as provided in Section 529(b)(4) of the Internal
24Revenue Code. Donors and designated beneficiaries, in those
25capacities, may not, directly or indirectly, direct the
26investment of any contributions to the Pool (or any earnings

 

 

HB2837 Enrolled- 7 -LRB101 08070 JRG 53133 b

1thereon).
2    (i) Distributions. Distributions from an account in the
3College Savings Pool may be used for the designated
4beneficiary's qualified expenses. Funds contained in a College
5Savings Pool account may be rolled over into an eligible ABLE
6account, as defined in Section 16.6 of this Act, to the extent
7permitted by Section 529(c)(3)(C) of the Internal Revenue Code.
8To the extent a nonqualified withdrawal is made from an
9account, the earnings portion of such distribution may be
10treated by the Internal Revenue Service as income subject to
11income tax and a 10% federal penalty tax. Internet
12    Distributions made from the College Savings Pool may be
13made directly to the eligible educational institution,
14directly to a vendor, in the form of a check payable to both
15the designated beneficiary and the institution or vendor,
16directly to the designated beneficiary or account owner, or in
17any other manner that is permissible under Section 529 of the
18Internal Revenue Code.
19    (j) Contributions. Contributions to the College Savings
20Pool shall be as follows:
21        (1) Contributions to an account in the College Savings
22    Pool may be made only in cash.
23        (2) The Treasurer shall limit the contributions that
24    may be made to the College Savings Pool on behalf of a
25    designated beneficiary, as required under Section 529 of
26    the Internal Revenue Code, to prevent contributions for the

 

 

HB2837 Enrolled- 8 -LRB101 08070 JRG 53133 b

1    benefit of a designated beneficiary in excess of those
2    necessary to provide for the qualified expenses of the
3    designated beneficiary. The Pool shall not permit any
4    additional contributions to an account as soon as the
5    aggregate accounts for the designated beneficiary in the
6    Pool reach a specified account balance limit applicable to
7    all designated beneficiaries.
8        (3) The contributions made on behalf of a designated
9    beneficiary who is also a beneficiary under the Illinois
10    Prepaid Tuition Program shall be further restricted to
11    ensure that the contributions in both programs combined do
12    not exceed the limit established for the College Savings
13    Pool.
14    (k) Illinois Student Assistance Commission. The Treasurer
15shall provide the Illinois Student Assistance Commission each
16year at a time designated by the Commission, an electronic
17report of all account owner accounts in the Treasurer's College
18Savings Pool, listing total contributions and disbursements
19from each individual account during the previous calendar year.
20As soon thereafter as is possible following receipt of the
21Treasurer's report, the Illinois Student Assistance Commission
22shall, in turn, provide the Treasurer with an electronic report
23listing those College Savings Pool account owners who also
24participate in the Illinois Prepaid Tuition Program State's
25prepaid tuition program, administered by the Commission. The
26Commission shall be responsible for filing any combined tax

 

 

HB2837 Enrolled- 9 -LRB101 08070 JRG 53133 b

1reports regarding State qualified savings programs required by
2the United States Internal Revenue Service.
3    The Treasurer shall work with the Illinois Student
4Assistance Commission to coordinate the marketing of the
5College Savings Pool and the Illinois Prepaid Tuition Program
6when considered beneficial by the Treasurer and the Director of
7the Illinois Student Assistance Commission. The Treasurer
8shall provide a separate accounting for each designated
9beneficiary to each account owner.
10    (l) Prohibition; exemption. No interest in the program, or
11any portion thereof, may be used as security for a loan. Moneys
12held in an account invested in the College Savings Pool shall
13be exempt from all claims of the creditors of the account
14owner, donor, or designated beneficiary of that account, except
15for the non-exempt College Savings Pool transfers to or from
16the account as defined under subsection (j) of Section 12-1001
17of the Code of Civil Procedure.
18    (m) Taxation. The assets of the College Savings Pool and
19its income and operation shall be exempt from all taxation by
20the State of Illinois and any of its subdivisions. The accrued
21earnings on investments in the Pool once disbursed on behalf of
22a designated beneficiary shall be similarly exempt from all
23taxation by the State of Illinois and its subdivisions, so long
24as they are used for qualified expenses. Contributions to a
25College Savings Pool account during the taxable year may be
26deducted from adjusted gross income as provided in Section 203

 

 

HB2837 Enrolled- 10 -LRB101 08070 JRG 53133 b

1of the Illinois Income Tax Act. The provisions of this
2paragraph are exempt from Section 250 of the Illinois Income
3Tax Act.
4    (n) Rules. The Treasurer shall adopt rules he or she
5considers necessary for the efficient administration of the
6College Savings Pool. The rules shall provide whatever
7additional parameters and restrictions are necessary to ensure
8that the College Savings Pool meets all of the requirements for
9a qualified state tuition program under Section 529 of the
10Internal Revenue Code.
11    The rules shall provide for the administration expenses of
12the Pool to be paid from its earnings and for the investment
13earnings in excess of the expenses to be credited at least
14monthly to the account owners in the Pool in a manner which
15equitably reflects the differing amounts of their respective
16investments in the Pool and the differing periods of time for
17which those amounts were in the custody of the Pool.
18    The rules shall require the maintenance of records that
19enable the Treasurer's office to produce a report for each
20account in the Pool at least annually that documents the
21account balance and investment earnings.
22    Notice of any proposed amendments to the rules and
23regulations shall be provided to all account owners prior to
24adoption. Amendments to rules and regulations shall apply only
25to contributions made after the adoption of the amendment.
26    (o) Bond. The State Treasurer shall give bond with at least

 

 

HB2837 Enrolled- 11 -LRB101 08070 JRG 53133 b

1one surety, payable to and for the benefit of the account
2owners in the College Savings Pool, in the penal sum of
3$10,000,000, conditioned upon the faithful discharge of his or
4her duties in relation to the College Savings Pool.
5    (p) The changes made to subsections (c) and (e) of this
6Section by this amendatory Act of the 101st General Assembly
7are intended to be a restatement and clarification of existing
8law.
9(Source: P.A. 99-143, eff. 7-27-15; 100-161, eff. 8-18-17;
10100-863, eff. 8-14-18; 100-905, eff. 8-17-18; revised
1110-18-18.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.