Sen. Julie A. Morrison

Filed: 5/2/2019

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 2837

2    AMENDMENT NO. ______. Amend House Bill 2837 by replacing
3everything after the enacting clause with the following:
 
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.

 

 

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1    "Designated beneficiary" means any individual designated
2as the beneficiary of an account in the College Savings Pool by
3an account owner. A designated beneficiary must have a valid
4social security number or taxpayer identification number. In
5the case of an account established as part of a scholarship
6program permitted under Section 529 of the Internal Revenue
7Code, the designated beneficiary is any individual receiving
8benefits accumulated in the account as a scholarship.
9    "Member of the family" has the same meaning ascribed to
10that term under Section 529 of the Internal Revenue Code.
11    "Nonqualified withdrawal" means a distribution from an
12account other than a distribution that (i) is used for the
13qualified expenses of the designated beneficiary; (ii) results
14from the beneficiary's death, or disability, or other
15circumstances described in Section 530(d)(4)(B) of the
16Internal Revenue Code; (iii) is a rollover to another account
17in the College Savings Pool; or (iv) is a rollover to an ABLE
18account, as defined in Section 16.6 of this Act, or any
19distribution that, within 60 days after such distribution, is
20transferred to an ABLE account of the designated beneficiary or
21a member of the family of the designated beneficiary to the
22extent that the distribution, when added to all other
23contributions made to the ABLE account for the taxable year,
24does not exceed the limitation under Section 529A(b)(2)(B)(i)
25of the Internal Revenue Code.
26    "Program manager" means any financial institution or

 

 

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1entity lawfully doing business in the State of Illinois
2selected by the State Treasurer to oversee the recordkeeping,
3custody, customer service, investment management, and
4marketing for one or more of the programs in the College
5Savings Pool.
6    "Qualified expenses" means: (i) tuition, fees, and the
7costs of books, supplies, and equipment required for enrollment
8or attendance at an eligible educational institution; (ii)
9expenses for special needs services, in the case of a special
10needs beneficiary, which are incurred in connection with such
11enrollment or attendance; (iii) certain expenses for the
12purchase of computer or peripheral equipment, as defined in
13Section 168 of the federal Internal Revenue Code (26 U.S.C.
14168), computer software, as defined in Section 197 of the
15federal Internal Revenue Code (26 U.S.C. 197), or Internet
16access and related services, if such equipment, software, or
17services are to be used primarily by the beneficiary during any
18of the years the beneficiary is enrolled at an eligible
19educational institution, except that, such expenses shall not
20include expenses for computer software designed for sports,
21games, or hobbies, unless the software is predominantly
22educational in nature; and (iv) room and board expenses
23incurred while attending an eligible educational institution
24at least half-time. "Eligible educational institutions", as
25used in this Section, means public and private colleges, junior
26colleges, graduate schools, and certain vocational

 

 

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1institutions that are described in Section 1001 481 of the
2Higher Education Resource and Student Assistance Chapter of
3Title 20 of the United States Code Act of 1965 (20 U.S.C. 1001
41088) and that are eligible to participate in Department of
5Education student aid programs. A student shall be considered
6to be enrolled at least half-time if the student is enrolled
7for at least half the full-time academic workload for the
8course of study the student is pursuing as determined under the
9standards of the institution at which the student is enrolled.
10    (b) Establishment of the Pool. The State Treasurer may
11establish and administer the a College Savings Pool as a
12qualified tuition program under Section 529 of the Internal
13Revenue Code. The Pool may consist of one or more college
14savings programs. The State Treasurer, in administering the
15College Savings Pool, may receive, hold, and invest moneys paid
16into the Pool and perform such other actions as are necessary
17to ensure that the Pool operates as a qualified tuition program
18in accordance with Section 529 of the Internal Revenue Code.
19    (c) Administration of the College Savings Pool. The State
20Treasurer may engage one or more financial institutions to
21handle the overall administration, investment management,
22recordkeeping, and marketing of the programs in the College
23Savings Pool. The contributions deposited in the Pool, and any
24earnings thereon, shall not constitute property of the State or
25be commingled with State funds and the State shall have no
26claim to or against, or interest in, such funds; provided that

 

 

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1the State Treasurer may collect fees in accordance with this
2Act.
3    (c-5) The State Treasurer shall provide a separate
4accounting for each designated beneficiary. The separate
5accounting shall be provided to the account owner of the
6account for the designated beneficiary at least annually and
7shall show the account balance, the investment in the account,
8the investment earnings, and the distributions from the
9account.
10    (d) Availability of the College Savings Pool. The State
11Treasurer may permit persons, including trustees of trusts and
12custodians under a Uniform Transfers to Minors Act or Uniform
13Gifts to Minors Act account, and certain legal entities to be
14account owners, including as part of a scholarship program,
15provided that: (1) an individual, trustee or custodian must
16have a valid social security number or taxpayer identification
17number, be at least 18 years of age, and have a valid United
18States street address; and (2) a legal entity must have a valid
19taxpayer identification number and a valid United States street
20address. Both in-state and out-of-state persons may be account
21owners and donors, and both in-state and out-of-state
22individuals may be designated beneficiaries in the College
23Savings Pool.
24    (e) Fees. The State Treasurer shall establish fees to be
25imposed on accounts to cover recover the costs of
26administration, recordkeeping, and investment management. The

 

 

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1Treasurer must use his or her best efforts to keep these fees
2as low as possible and consistent with administration of high
3quality competitive college savings programs. Administrative
4fees, costs, and expenses, including investment fees and
5expenses, shall be paid from the assets of the College Savings
6Pool.
7    (f) Investments in the State. To enhance the safety and
8liquidity of the College Savings Pool, to ensure the
9diversification of the investment portfolio of the College
10Savings Pool, and in an effort to keep investment dollars in
11the State of Illinois, the State Treasurer may make a
12percentage of each account available for investment in
13participating financial institutions doing business in the
14State.
15    (g) Investment policy. The Treasurer shall develop,
16publish, and implement an investment policy covering the
17investment of the moneys in each of the programs in the College
18Savings Pool. The policy shall be published each year as part
19of the audit of the College Savings Pool by the Auditor
20General, which shall be distributed to all account owners in
21such program. The Treasurer shall notify all account owners in
22such program in writing, and the Treasurer shall publish in a
23newspaper of general circulation in both Chicago and
24Springfield, any changes to the previously published
25investment policy at least 30 calendar days before implementing
26the policy. Any investment policy adopted by the Treasurer

 

 

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1shall be reviewed and updated if necessary within 90 days
2following the date that the State Treasurer takes office.
3    (h) Investment restrictions. An account owner may,
4directly or indirectly, direct the investment of any
5contributions to the College Savings Pool (or any earnings
6thereon) only as provided in Section 529(b)(4) of the Internal
7Revenue Code. Donors and designated beneficiaries, in those
8capacities, may not, directly or indirectly, direct the
9investment of any contributions to the Pool (or any earnings
10thereon).
11    (i) Distributions. Distributions from an account in the
12College Savings Pool may be used for the designated
13beneficiary's qualified expenses. Funds contained in a College
14Savings Pool account may be rolled over into an eligible ABLE
15account, as defined in Section 16.6 of this Act, to the extent
16permitted by Section 529(c)(3)(C) of the Internal Revenue Code.
17To the extent a nonqualified withdrawal is made from an
18account, the earnings portion of such distribution may be
19treated by the Internal Revenue Service as income subject to
20income tax and a 10% federal penalty tax. Internet
21    Distributions made from the College Savings Pool may be
22made directly to the eligible educational institution,
23directly to a vendor, in the form of a check payable to both
24the designated beneficiary and the institution or vendor,
25directly to the designated beneficiary or account owner, or in
26any other manner that is permissible under Section 529 of the

 

 

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1Internal Revenue Code.
2    (j) Contributions. Contributions to the College Savings
3Pool 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 the
10    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
14    aggregate accounts for the designated beneficiary in the
15    Pool reach a specified account balance limit applicable to
16    all designated beneficiaries.
17        (3) The contributions made on behalf of a designated
18    beneficiary who is also a beneficiary under the Illinois
19    Prepaid Tuition Program shall be further restricted to
20    ensure that the contributions in both programs combined do
21    not exceed the limit established for the College Savings
22    Pool.
23    (k) Illinois Student Assistance Commission. The Treasurer
24shall provide the Illinois Student Assistance Commission each
25year at a time designated by the Commission, an electronic
26report of all account owner accounts in the Treasurer's College

 

 

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1Savings Pool, listing total contributions and disbursements
2from each individual account during the previous calendar year.
3As soon thereafter as is possible following receipt of the
4Treasurer's report, the Illinois Student Assistance Commission
5shall, in turn, provide the Treasurer with an electronic report
6listing those College Savings Pool account owners who also
7participate in the Illinois Prepaid Tuition Program State's
8prepaid tuition program, administered by the Commission. The
9Commission shall be responsible for filing any combined tax
10reports regarding State qualified savings programs required by
11the United States Internal Revenue Service.
12    The Treasurer shall work with the Illinois Student
13Assistance Commission to coordinate the marketing of the
14College Savings Pool and the Illinois Prepaid Tuition Program
15when considered beneficial by the Treasurer and the Director of
16the Illinois Student Assistance Commission. The Treasurer
17shall provide a separate accounting for each designated
18beneficiary to each account owner.
19    (l) Prohibition; exemption. No interest in the program, or
20any portion thereof, may be used as security for a loan. Moneys
21held in an account invested in the College Savings Pool shall
22be exempt from all claims of the creditors of the account
23owner, donor, or designated beneficiary of that account, except
24for the non-exempt College Savings Pool transfers to or from
25the account as defined under subsection (j) of Section 12-1001
26of the Code of Civil Procedure.

 

 

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1    (m) Taxation. The assets of the College Savings Pool and
2its income and operation shall be exempt from all taxation by
3the State of Illinois and any of its subdivisions. The accrued
4earnings on investments in the Pool once disbursed on behalf of
5a designated beneficiary shall be similarly exempt from all
6taxation by the State of Illinois and its subdivisions, so long
7as they are used for qualified expenses. Contributions to a
8College Savings Pool account during the taxable year may be
9deducted from adjusted gross income as provided in Section 203
10of the Illinois Income Tax Act. The provisions of this
11paragraph are exempt from Section 250 of the Illinois Income
12Tax Act.
13    (n) Rules. The Treasurer shall adopt rules he or she
14considers necessary for the efficient administration of the
15College Savings Pool. The rules shall provide whatever
16additional parameters and restrictions are necessary to ensure
17that the College Savings Pool meets all of the requirements for
18a qualified state tuition program under Section 529 of the
19Internal Revenue Code.
20    The rules shall provide for the administration expenses of
21the Pool to be paid from its earnings and for the investment
22earnings in excess of the expenses to be credited at least
23monthly to the account owners in the Pool in a manner which
24equitably reflects the differing amounts of their respective
25investments in the Pool and the differing periods of time for
26which those amounts were in the custody of the Pool.

 

 

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1    The rules shall require the maintenance of records that
2enable the Treasurer's office to produce a report for each
3account in the Pool at least annually that documents the
4account balance and investment earnings.
5    Notice of any proposed amendments to the rules and
6regulations shall be provided to all account owners prior to
7adoption. Amendments to rules and regulations shall apply only
8to contributions made after the adoption of the amendment.
9    (o) Bond. The State Treasurer shall give bond with at least
10one surety, payable to and for the benefit of the account
11owners in the College Savings Pool, in the penal sum of
12$10,000,000, conditioned upon the faithful discharge of his or
13her duties in relation to the College Savings Pool.
14    (p) The changes made to subsections (c) and (e) of this
15Section by this amendatory Act of the 101st General Assembly
16are intended to be a restatement and clarification of existing
17law.
18(Source: P.A. 99-143, eff. 7-27-15; 100-161, eff. 8-18-17;
19100-863, eff. 8-14-18; 100-905, eff. 8-17-18; revised
2010-18-18.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.".