Full Text of HB2837 101st General Assembly
HB2837sam001 101ST GENERAL ASSEMBLY | 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 | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The State Treasurer Act is amended by changing | 5 | | Section 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 | 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. |
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| 1 | | "Designated beneficiary" means any individual designated | 2 | | as the beneficiary of an account in the College Savings Pool by | 3 | | an account owner. A designated beneficiary must have a valid | 4 | | social security number or taxpayer identification number. In | 5 | | the case of an account established as part of a scholarship | 6 | | program permitted under Section 529 of the Internal Revenue | 7 | | Code, the designated beneficiary is any individual receiving | 8 | | benefits accumulated in the account as a scholarship. | 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 , or other | 15 | | circumstances described in Section 530(d)(4)(B) of the | 16 | | Internal Revenue Code ; (iii) is a rollover to another account | 17 | | in the College Savings Pool; or (iv) is a rollover to an ABLE | 18 | | account, as defined in Section 16.6 of this Act, or any | 19 | | distribution that, within 60 days after such distribution, is | 20 | | transferred to an ABLE account of the designated beneficiary or | 21 | | a member of the family of the designated beneficiary to the | 22 | | extent that the distribution, when added to all other | 23 | | contributions made to the ABLE account for the taxable year, | 24 | | does not exceed the limitation under Section 529A(b) (2)(B)(i) | 25 | | of the Internal Revenue Code. | 26 | | "Program manager" means any financial institution or |
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| 1 | | entity lawfully doing business in the State of Illinois | 2 | | selected by the State Treasurer to oversee the recordkeeping, | 3 | | custody, customer service, investment management, and | 4 | | marketing for one or more of the programs in the College | 5 | | Savings Pool. | 6 | | "Qualified expenses" means: (i) tuition, fees, and the | 7 | | costs of books, supplies, and equipment required for enrollment | 8 | | or attendance at an eligible educational institution; (ii) | 9 | | expenses for special needs services, in the case of a special | 10 | | needs beneficiary, which are incurred in connection with such | 11 | | enrollment or attendance; (iii) certain expenses for the | 12 | | purchase of computer or peripheral equipment, as defined in | 13 | | Section 168 of the federal Internal Revenue Code (26 U.S.C. | 14 | | 168), computer software, as defined in Section 197 of the | 15 | | federal Internal Revenue Code (26 U.S.C. 197), or Internet | 16 | | access and related services, if such equipment, software, or | 17 | | services are to be used primarily by the beneficiary during any | 18 | | of the years the beneficiary is enrolled at an eligible | 19 | | educational institution, except that, such expenses shall not | 20 | | include expenses for computer software designed for sports, | 21 | | games, or hobbies, unless the software is predominantly | 22 | | educational in nature; and (iv) room and board expenses | 23 | | incurred while attending an eligible educational institution | 24 | | at least half-time. "Eligible educational institutions", as | 25 | | used in this Section, means public and private colleges, junior | 26 | | colleges, graduate schools, and certain vocational |
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| 1 | | institutions that are described in Section 1001 481 of the | 2 | | Higher Education Resource and Student Assistance Chapter of | 3 | | Title 20 of the United States Code Act of 1965 (20 U.S.C. 1001 | 4 | | 1088 ) and that are eligible to participate in Department of | 5 | | Education student aid programs. A student shall be considered | 6 | | to be enrolled at least half-time if the student is enrolled | 7 | | for at least half the full-time academic workload for the | 8 | | course of study the student is pursuing as determined under the | 9 | | standards of the institution at which the student is enrolled. | 10 | | (b) Establishment of the Pool. The State Treasurer may | 11 | | establish and
administer the a College Savings Pool as a | 12 | | qualified tuition program under Section 529 of the Internal | 13 | | Revenue Code. The Pool may consist of one or more college | 14 | | savings programs. The State Treasurer, in administering the | 15 | | College Savings
Pool, may receive, hold, and invest moneys paid | 16 | | into the Pool and perform such other actions as are necessary | 17 | | to ensure that the Pool operates as a qualified tuition program | 18 | | in accordance with Section 529 of the Internal Revenue Code.
| 19 | | (c) Administration of the College Savings Pool. The State | 20 | | Treasurer may engage one or more financial institutions to | 21 | | handle the overall administration, investment management, | 22 | | recordkeeping, and marketing of the programs in the College | 23 | | Savings Pool. The contributions deposited in the Pool, and any | 24 | | earnings thereon, shall not constitute property of the State or | 25 | | be commingled with State funds and the State shall have no | 26 | | claim to or against, or interest in, such funds ; provided that |
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| 1 | | the State Treasurer may collect fees in accordance with this | 2 | | Act .
| 3 | | (c-5) The State Treasurer shall provide a separate | 4 | | accounting for each designated beneficiary. The separate | 5 | | accounting shall be provided to the account owner of the | 6 | | account for the designated beneficiary at least annually and | 7 | | shall show the account balance, the investment in the account, | 8 | | the investment earnings, and the distributions from the | 9 | | account. | 10 | | (d) Availability of the College Savings Pool. The State | 11 | | Treasurer may permit persons, including trustees of trusts and | 12 | | custodians under a Uniform Transfers to Minors Act or Uniform | 13 | | Gifts to Minors Act account, and certain legal entities to be | 14 | | account owners, including as part of a scholarship program, | 15 | | provided that: (1) an individual, trustee or custodian must | 16 | | have a valid social security number or taxpayer identification | 17 | | number, be at least 18 years of age, and have a valid United | 18 | | States street address; and (2) a legal entity must have a valid | 19 | | taxpayer identification number and a valid United States street | 20 | | address. Both in-state and out-of-state persons may be account | 21 | | owners and donors, and both in-state and out-of-state | 22 | | individuals may be designated beneficiaries in the College | 23 | | Savings Pool. | 24 | | (e) Fees. The State Treasurer shall establish fees to be | 25 | | imposed on accounts to cover recover the costs of | 26 | | administration, recordkeeping, and investment management. The |
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| 1 | | Treasurer must use his or her best efforts to keep these fees | 2 | | as low as possible and consistent with administration of high | 3 | | quality competitive college savings programs. Administrative | 4 | | fees, costs, and expenses, including investment fees and | 5 | | expenses, shall be paid from the assets of the College Savings | 6 | | Pool. | 7 | | (f) Investments in the State. To enhance the safety and | 8 | | liquidity of the College Savings Pool,
to ensure the | 9 | | diversification of the investment portfolio of the College | 10 | | Savings Pool, and in
an effort to keep investment dollars in | 11 | | the State of Illinois, the State
Treasurer may make a | 12 | | percentage of each account available for investment in
| 13 | | participating financial institutions doing business in the | 14 | | State.
| 15 | | (g) Investment policy. The Treasurer shall develop, | 16 | | publish, and implement an investment policy
covering the | 17 | | investment of the moneys in each of the programs in the College | 18 | | Savings Pool. The policy
shall be published each year as part
| 19 | | of the audit of the College Savings Pool by the Auditor | 20 | | General, which shall be
distributed to all account owners in | 21 | | such program. The Treasurer shall notify all account owners in | 22 | | such program
in writing, and the Treasurer shall publish in a | 23 | | newspaper of general
circulation in both Chicago and | 24 | | Springfield, any changes to the previously
published | 25 | | investment policy at least 30 calendar days before implementing | 26 | | the
policy. Any investment policy adopted by the Treasurer |
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| 1 | | shall be reviewed and
updated if necessary within 90 days | 2 | | following the date that the State Treasurer
takes office.
| 3 | | (h) Investment restrictions. An account owner may, | 4 | | directly or indirectly, direct the investment of any | 5 | | contributions to the College Savings Pool (or any earnings | 6 | | thereon) only as provided in Section 529(b)(4) of the Internal | 7 | | Revenue Code. Donors and designated beneficiaries, in those | 8 | | capacities, may not, directly or indirectly, direct the | 9 | | investment of any contributions to the Pool (or any earnings | 10 | | thereon). | 11 | | (i) Distributions. Distributions from an account in the | 12 | | College
Savings Pool may be used for the designated | 13 | | beneficiary's qualified expenses. Funds contained in a College | 14 | | Savings Pool account may be rolled over into an eligible ABLE | 15 | | account, as defined in Section 16.6 of this Act, to the extent | 16 | | permitted by Section 529 (c)(3)(C) of the Internal Revenue Code. | 17 | | To the extent a nonqualified withdrawal is made from an | 18 | | account, the earnings portion of such distribution may be | 19 | | treated by the Internal Revenue Service as income subject to | 20 | | income tax and a 10% federal penalty tax.
Internet | 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 |
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| 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 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 | 24 | | shall provide the Illinois Student Assistance Commission
each | 25 | | year at a time designated by the Commission, an electronic | 26 | | report of all account owner
accounts in the Treasurer's College |
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| 1 | | Savings Pool, listing total
contributions and disbursements | 2 | | from each individual account during the
previous calendar year. | 3 | | As soon thereafter as is possible following receipt of
the | 4 | | Treasurer's report, the Illinois Student Assistance Commission | 5 | | shall, in
turn, provide the Treasurer with an electronic report | 6 | | listing those College
Savings Pool account owners who also | 7 | | participate in the Illinois Prepaid Tuition Program State's | 8 | | prepaid tuition
program , administered by the Commission. The | 9 | | Commission shall be responsible
for filing any combined tax | 10 | | reports regarding State qualified savings programs
required by | 11 | | the United States Internal Revenue Service. | 12 | | The Treasurer shall
work with the Illinois Student | 13 | | Assistance Commission to coordinate the
marketing of the | 14 | | College Savings Pool and the Illinois Prepaid Tuition
Program | 15 | | when considered beneficial by the Treasurer and the Director of | 16 | | the
Illinois Student Assistance
Commission. The Treasurer | 17 | | shall provide a separate accounting for each
designated | 18 | | beneficiary to each account owner. | 19 | | (l) Prohibition; exemption. No interest in the program, or | 20 | | any portion thereof, may be used as security for a
loan. Moneys | 21 | | held in an account invested in the College Savings Pool shall | 22 | | be exempt from all claims of the creditors of the account | 23 | | owner, donor, or designated beneficiary of that account, except | 24 | | for the non-exempt College Savings Pool transfers to or from | 25 | | the account as defined under subsection (j) of Section 12-1001 | 26 | | of the Code of Civil Procedure.
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| 1 | | (m) Taxation. The assets of the College Savings Pool and | 2 | | its income and operation shall
be exempt from all taxation by | 3 | | the State of Illinois and any of its
subdivisions. The accrued | 4 | | earnings on investments in the Pool once disbursed
on behalf of | 5 | | a designated beneficiary shall be similarly exempt from all
| 6 | | taxation by the State of Illinois and its subdivisions, so long | 7 | | as they are
used for qualified expenses. Contributions to a | 8 | | College Savings Pool account
during the taxable year may be | 9 | | deducted from adjusted gross income as provided
in Section 203 | 10 | | of the Illinois Income Tax Act. The provisions of this
| 11 | | paragraph are exempt from Section 250 of the Illinois Income | 12 | | Tax Act.
| 13 | | (n) Rules. The Treasurer shall adopt rules he or she | 14 | | considers necessary for the
efficient administration of the | 15 | | College Savings Pool. The rules shall provide
whatever | 16 | | additional parameters and restrictions are necessary to ensure | 17 | | that
the College Savings Pool meets all of the requirements for | 18 | | a qualified state
tuition program under Section 529 of the | 19 | | Internal Revenue Code.
| 20 | | The rules shall provide for the administration expenses of | 21 | | the Pool to be paid
from its earnings and for the investment | 22 | | earnings in excess of the expenses to be credited at least | 23 | | monthly to the account owners in the Pool in a manner which | 24 | | equitably reflects the differing
amounts of their respective | 25 | | investments in the Pool and the differing periods
of time for | 26 | | which those amounts were in the custody of the Pool. |
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| 1 | | The
rules shall require the maintenance of records that | 2 | | enable the Treasurer's
office to produce a report for each | 3 | | account in the Pool at least annually that
documents the | 4 | | account balance and investment earnings. | 5 | | Notice of any proposed
amendments to the rules and | 6 | | regulations shall be provided to all account owners
prior to | 7 | | adoption. Amendments to rules and regulations shall apply only | 8 | | to
contributions made after the adoption of the amendment.
| 9 | | (o) Bond. The State Treasurer shall give bond
with at least | 10 | | one surety, payable to and for the benefit of the
account | 11 | | owners in the College Savings Pool, in the penal sum of | 12 | | $10,000,000,
conditioned upon the faithful discharge of his or | 13 | | her duties in relation to
the College Savings Pool.
| 14 | | (p) The changes made to subsections (c) and (e) of this | 15 | | Section by this amendatory Act of the 101st General Assembly | 16 | | are intended to be a restatement and clarification of existing | 17 | | law. | 18 | | (Source: P.A. 99-143, eff. 7-27-15; 100-161, eff. 8-18-17; | 19 | | 100-863, eff. 8-14-18; 100-905, eff. 8-17-18; revised | 20 | | 10-18-18.)
| 21 | | Section 99. Effective date. This Act takes effect upon | 22 | | becoming law.".
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