Illinois General Assembly - Full Text of SB0168
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Full Text of SB0168  102nd General Assembly

SB0168 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB0168

 

Introduced 2/9/2021, by Sen. Laura Ellman

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.5

    Amends the State Treasurer Act. Modifies provisions concerning the College Savings Pool. Provides that the State Treasurer, in administering the College Savings Pool, may, among other actions, perform any other action he or she deems necessary to administer the Pool. Provides that the State Treasurer may delegate duties related to the College Savings Pool to one or more contractors. Provides that any fees, costs, and expenses related to the College Savings Pool shall be paid from the assets of the College Savings Pool. Provides further requirements concerning fees of the College Savings Pool. Modifies provisions concerning investment restrictions, distributions, and contributions of the College Savings Pool. Modifies provisions concerning the Illinois Student Assistance Commission. Provides that the State Treasurer and the Illinois Student Assistance Commission shall each cooperate in providing each other with account information, as necessary, to prevent contributions in excess of those necessary to provide for the qualified expenses of the designated beneficiary. Removes provisions requiring the maintenance of specified records. Modifies defined terms. Makes conforming and other changes. Effective immediately.


LRB102 10144 RJF 15466 b

 

 

A BILL FOR

 

SB0168LRB102 10144 RJF 15466 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

 

 

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1benefits accumulated in the account as a scholarship.
2    "Eligible educational institution" means public and
3private colleges, junior colleges, graduate schools, and
4certain vocational institutions that are described in Section
51001 of the Higher Education Resource and Student Assistance
6Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
7and that are eligible to participate in Department of
8Education student aid programs.
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; (iii) is a
15rollover to another account in the College Savings Pool; or
16(iv) is a rollover to an ABLE account, as defined in Section
1716.6 of this Act, or any distribution that, within 60 days
18after such distribution, is transferred to an ABLE account of
19the designated beneficiary or a member of the family of the
20designated beneficiary to the extent that the distribution,
21when added to all other contributions made to the ABLE account
22for the taxable year, does not exceed the limitation under
23Section 529A(b) of the Internal Revenue Code.
24    "Program manager" means any financial institution or
25entity lawfully doing business in the State of Illinois
26selected by the State Treasurer to oversee the recordkeeping,

 

 

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1custody, customer service, investment management, and
2marketing for one or more of the programs in the College
3Savings Pool.
4    "Qualified expenses" means: (i) tuition, fees, and the
5costs of books, supplies, and equipment required for
6enrollment or attendance at an eligible educational
7institution; (ii) expenses for special needs services, in the
8case of a special needs beneficiary, which are incurred in
9connection with such enrollment or attendance; (iii) certain
10expenses, to the extent they qualify as qualified higher
11education expenses under Section 529 of the Internal Revenue
12Code, for the purchase of computer or peripheral equipment, as
13defined in Section 168 of the federal Internal Revenue Code
14(26 U.S.C. 168), computer software, as defined in Section 197
15of the federal Internal Revenue Code (26 U.S.C. 197), or
16Internet access and related services, if such equipment,
17software, or services are to be used primarily by the
18beneficiary during any of the years the beneficiary is
19enrolled at an eligible educational institution, except that,
20such expenses shall not include expenses for computer software
21designed for sports, games, or hobbies, unless the software is
22predominantly educational in nature; and (iv) room and board
23expenses incurred while attending an eligible educational
24institution at least half-time; (v) expenses for fees, books,
25supplies, and equipment required for the participation of a
26designated beneficiary in an apprenticeship program registered

 

 

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1and certified with the Secretary of Labor under the National
2Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
3principal or interest on any qualified education loan of the
4designated beneficiary or a sibling of the designated
5beneficiary, as allowed under Section 529 of the Internal
6Revenue Code. . "Eligible educational institutions", as used in
7this Section, means public and private colleges, junior
8colleges, graduate schools, and certain vocational
9institutions that are described in Section 1001 of the Higher
10Education Resource and Student Assistance Chapter of Title 20
11of the United States Code (20 U.S.C. 1001) and that are
12eligible to participate in Department of Education student aid
13programs. A student shall be considered to be enrolled at
14least half-time if the student is enrolled for at least half
15the full-time academic workload for the course of study the
16student is pursuing as determined under the standards of the
17institution at which the student is enrolled.
18    (b) Establishment of the Pool. The State Treasurer may
19establish and administer the College Savings Pool as a
20qualified tuition program under Section 529 of the Internal
21Revenue Code. The Pool may consist of one or more college
22savings programs. The State Treasurer, in administering the
23College Savings Pool, may: (1) receive, hold, and invest
24moneys paid into the Pool; and (2) perform any other action he
25or she deems necessary to administer the Pool, including any
26such other actions as are necessary to ensure that the Pool

 

 

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1operates as a qualified tuition program in accordance with
2Section 529 of the Internal Revenue Code.
3    (c) Administration of the College Savings Pool. The State
4Treasurer may delegate duties related to the College Savings
5Pool to engage one or more contractors financial institutions
6to handle the overall administration, investment management,
7recordkeeping, and marketing of the programs in the College
8Savings Pool. The contributions deposited in the Pool, and any
9earnings thereon, shall not constitute property of the State
10or be commingled with State funds and the State shall have no
11claim to or against, or interest in, such funds; provided that
12the fees collected by the State Treasurer in accordance with
13this Act, scholarship programs administered by the State
14Treasurer, and seed funds deposited by the State Treasurer
15under Section 16.8 of the Act are State funds State Treasurer
16may collect fees in accordance with this Act.
17    (c-5) College Savings Pool Account Summaries. The State
18Treasurer shall provide a separate accounting for each
19designated beneficiary. The separate accounting shall be
20provided to the account owner of the account for the
21designated beneficiary at least annually and shall show the
22account balance, the investment in the account, the investment
23earnings, and the distributions from the account.
24    (d) Availability of the College Savings Pool. The State
25Treasurer may permit persons, including trustees of trusts and
26custodians under a Uniform Transfers to Minors Act or Uniform

 

 

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1Gifts to Minors Act account, and certain legal entities to be
2account owners, including as part of a scholarship program,
3provided that: (1) an individual, trustee or custodian must
4have a valid social security number or taxpayer identification
5number, be at least 18 years of age, and have a valid United
6States street address; and (2) a legal entity must have a valid
7taxpayer identification number and a valid United States
8street address. In-state Both in-state and out-of-state
9persons, trustees, custodians, and legal entities may be
10account owners and donors, and both in-state and out-of-state
11individuals may be designated beneficiaries in the College
12Savings Pool.
13    (e) Fees. Any fees, costs, and expenses, including
14investment fees and expenses and payments to third parties,
15related to the College Savings Pool, shall be paid from the
16assets of the College Savings Pool. The State Treasurer shall
17establish fees to be imposed on accounts to cover such fees,
18costs, and expenses, to the extent not paid directly out of the
19investments of the College Savings Pool, and to maintain an
20adequate reserve fund in line with industry standards for
21government operated funds the costs of administration,
22recordkeeping, and investment management. The Treasurer must
23use his or her best efforts to keep these fees as low as
24possible and consistent with administration of high quality
25competitive college savings programs. Administrative fees,
26costs, and expenses, including investment fees and expenses,

 

 

SB0168- 7 -LRB102 10144 RJF 15466 b

1shall be paid from the assets of the College Savings Pool.
2    (f) Investments in the State. To enhance the safety and
3liquidity of the College Savings Pool, to ensure the
4diversification of the investment portfolio of the College
5Savings Pool, and in an effort to keep investment dollars in
6the State of Illinois, the State Treasurer may make a
7percentage of each account available for investment in
8participating financial institutions doing business in the
9State.
10    (g) Investment policy. The Treasurer shall develop,
11publish, and implement an investment policy covering the
12investment of the moneys in each of the programs in the College
13Savings Pool. The policy shall be published each year as part
14of the audit of the College Savings Pool by the Auditor
15General, which shall be distributed to all account owners in
16such program. The Treasurer shall notify all account owners in
17such program in writing, and the Treasurer shall publish in a
18newspaper of general circulation in both Chicago and
19Springfield, any changes to the previously published
20investment policy at least 30 calendar days before
21implementing the policy. Any investment policy adopted by the
22Treasurer shall be reviewed and updated if necessary within 90
23days following the date that the State Treasurer takes office.
24    (h) Investment restrictions. An account owner may,
25directly or indirectly, direct the investment of his or her
26account of any contributions to the College Savings Pool (or

 

 

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1any earnings thereon) only as provided in Section 529(b)(4) of
2the Internal Revenue Code. Donors and designated
3beneficiaries, in those capacities, may not, directly or
4indirectly, direct the investment of an account any
5contributions to the Pool (or any earnings thereon).
6    (i) Distributions. Distributions from an account in the
7College Savings Pool may be used for the designated
8beneficiary's qualified expenses, and if not used in that
9manner, may be considered a nonqualified withdrawal. Funds
10contained in a College Savings Pool account may be rolled over
11into an eligible ABLE account, as defined in Section 16.6 of
12this Act, or another qualified tuition program, to the extent
13permitted by Section 529 of the Internal Revenue Code.
14    Distributions made from the College Savings Pool may be
15made directly to the eligible educational institution,
16directly to a vendor, in the form of a check payable to both
17the designated beneficiary and the institution or vendor,
18directly to the designated beneficiary or account owner, or in
19any other manner that is permissible under Section 529 of the
20Internal Revenue Code.
21    (j) Contributions. Contributions to the College Savings
22Pool shall be as follows:
23        (1) Contributions to an account in the College Savings
24    Pool may be made only in cash.
25        (2) The Treasurer shall limit the contributions that
26    may be made to the College Savings Pool on behalf of a

 

 

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1    designated beneficiary, as required under Section 529 of
2    the Internal Revenue Code, to prevent contributions for
3    the benefit of a designated beneficiary in excess of those
4    necessary to provide for the qualified expenses of the
5    designated beneficiary. The Pool shall not permit any
6    additional contributions to an account as soon as the sum
7    of (i) the aggregate balance in all accounts in the Pool
8    for the designated beneficiary and (ii) the aggregate
9    contributions in the Illinois Prepaid Tuition Program for
10    the designated beneficiary reaches the specified balance
11    limit established from time to time by the Treasurer. in
12    the Pool reach a specified account balance limit
13    applicable to all designated beneficiaries.
14        (3) The contributions made on behalf of a designated
15    beneficiary who is also a beneficiary under the Illinois
16    Prepaid Tuition Program shall be further restricted to
17    ensure that the contributions in both programs combined do
18    not exceed the limit established for the College Savings
19    Pool.
20    (k) Illinois Student Assistance Commission. The Treasurer
21and the Illinois Student Assistance Commission shall each
22cooperate in providing each other with account information, as
23necessary, to prevent contributions in excess of those
24necessary to provide for the qualified expenses of the
25designated beneficiary, as described in subsection (j) shall
26provide the Illinois Student Assistance Commission each year

 

 

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1at a time designated by the Commission, an electronic report
2of all account owner accounts in the Treasurer's College
3Savings Pool, listing total contributions and disbursements
4from each individual account during the previous calendar
5year. As soon thereafter as is possible following receipt of
6the Treasurer's report, the Illinois Student Assistance
7Commission shall, in turn, provide the Treasurer with an
8electronic report listing those College Savings Pool account
9owners who also participate in the Illinois Prepaid Tuition
10Program, administered by the Commission.
11    The Treasurer shall work with the Illinois Student
12Assistance Commission to coordinate the marketing of the
13College Savings Pool and the Illinois Prepaid Tuition Program
14when considered beneficial by the Treasurer and the Director
15of the Illinois Student Assistance Commission.
16    (l) Prohibition; exemption. No interest in the program, or
17any portion thereof, may be used as security for a loan. Moneys
18held in an account invested in the College Savings Pool shall
19be exempt from all claims of the creditors of the account
20owner, donor, or designated beneficiary of that account,
21except for the non-exempt College Savings Pool transfers to or
22from the account as defined under subsection (j) of Section
2312-1001 of the Code of Civil Procedure.
24    (m) Taxation. The assets of the College Savings Pool and
25its income and operation shall be exempt from all taxation by
26the State of Illinois and any of its subdivisions. The accrued

 

 

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1earnings on investments in the Pool once disbursed on behalf
2of a designated beneficiary shall be similarly exempt from all
3taxation by the State of Illinois and its subdivisions, so
4long as they are used for qualified expenses. Contributions to
5a College Savings Pool account during the taxable year may be
6deducted from adjusted gross income as provided in Section 203
7of the Illinois Income Tax Act. The provisions of this
8paragraph are exempt from Section 250 of the Illinois Income
9Tax Act.
10    (n) Rules. The Treasurer shall adopt rules he or she
11considers necessary for the efficient administration of the
12College Savings Pool. The rules shall provide whatever
13additional parameters and restrictions are necessary to ensure
14that the College Savings Pool meets all the requirements for a
15qualified tuition program under Section 529 of the Internal
16Revenue Code.
17    The rules shall require the maintenance of records that
18enable the Treasurer's office to produce a report for each
19account in the Pool at least annually that documents the
20account balance and investment earnings.
21    Notice of any proposed amendments to the rules and
22regulations shall be provided to all account owners prior to
23adoption.
24    (o) Bond. The State Treasurer shall give bond with at
25least one surety, payable to and for the benefit of the account
26owners in the College Savings Pool, in the penal sum of

 

 

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1$10,000,000, conditioned upon the faithful discharge of his or
2her duties in relation to the College Savings Pool.
3    (p) The changes made to subsections (c) and (e) of this
4Section by Public Act 101-26 this amendatory Act of the 101st
5General Assembly are intended to be a restatement and
6clarification of existing law.
7(Source: P.A. 100-161, eff. 8-18-17; 100-863, eff. 8-14-18;
8100-905, eff. 8-17-18; 101-26, eff. 6-21-19; 101-81, eff.
97-12-19.)
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.