Illinois General Assembly - Full Text of SB0539
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Full Text of SB0539  102nd General Assembly

SB0539 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB0539

 

Introduced 2/23/2021, by Sen. Laura Fine

 

SYNOPSIS AS INTRODUCED:
 
15 ILCS 505/16.6

    Amends the State Treasurer Act. Provides that for purposes of the ABLE account program, a designated beneficiary means the ABLE account owner. Provides that upon the death of a designated beneficiary, proceeds from an account may be transferred pursuant to a payable on death account agreement. Provides that upon the death of a designated beneficiary, the State Treasurer may require verification that the funeral and burial expenses of the designated beneficiary have been paid. Makes conforming changes. Effective immediately.


LRB102 04041 RJF 14057 b

 

 

A BILL FOR

 

SB0539LRB102 04041 RJF 14057 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 16.6 as follows:
 
6    (15 ILCS 505/16.6)
7    Sec. 16.6. ABLE account program.
8    (a) As used in this Section:
9    "ABLE account" or "account" means an account established
10for the purpose of financing certain qualified expenses of
11eligible individuals as specifically provided for in this
12Section and authorized by Section 529A of the Internal Revenue
13Code.
14    "ABLE account plan" or "plan" means the savings account
15plan provided for in this Section.
16    "Account administrator" means the person or entity
17selected by the State Treasurer to administer the daily
18operations of the ABLE account plan and provide marketing,
19recordkeeping, investment management, and other services for
20the plan.
21    "Aggregate account balance" means the amount in an account
22on a particular date or the fair market value of an account on
23a particular date.

 

 

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1    "Beneficiary" or "designated beneficiary" means the ABLE
2account owner.
3    "Contracting state" means a state without a qualified ABLE
4program which has entered into a contract with Illinois to
5provide residents of the contracting state access to a
6qualified ABLE program.
7    "Designated representative" means a person who is
8authorized to act on behalf of a "designated beneficiary" an
9account owner. A designated beneficiary An account owner is
10authorized to act on his or her own behalf unless the
11designated beneficiary account owner is a minor or the
12designated beneficiary account owner has been adjudicated to
13have a disability so that a guardian has been appointed. A
14designated representative acts in a fiduciary capacity to the
15designated beneficiary account owner. The State Treasurer
16shall recognize the following as a designated representative
17without appointment by a court:
18        (1) The designated beneficiary's account owner's
19    guardian of the person, plenary guardian of the estate,
20    limited guardian of financial or contractual matters, or
21    any other State-appointed guardian. A guardian acting in
22    this capacity shall not be required to seek court approval
23    for any ABLE account activity.
24        (2) The agent named by the designated beneficiary
25    account owner in a property power of attorney recognized
26    as a statutory short form power of attorney for property.

 

 

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1        (3) Such individual or entity that the designated
2    beneficiary account owner so designates in writing, in a
3    manner to be established by the State Treasurer.
4        (4) Such other individual or entity designated by the
5    State Treasurer pursuant to its rules.
6    "Disability certification" has the meaning given to that
7term under Section 529A of the Internal Revenue Code.
8    "Eligible individual" has the meaning given to that term
9under Section 529A of the Internal Revenue Code.
10    "Participation agreement" means an agreement to
11participate in the ABLE account plan between a designated
12beneficiary an account owner and the State, through its
13agencies and the State Treasurer.
14    "Qualified disability expenses" has the meaning given to
15that term under Section 529A of the Internal Revenue Code.
16    "Qualified withdrawal" or "qualified distribution" means a
17withdrawal from an ABLE account to pay the qualified
18disability expenses of the beneficiary of the account.
19    (b) Establishment of the ABLE Program. The "Achieving a
20Better Life Experience" or "ABLE" account program is hereby
21created and shall be administered by the State Treasurer. The
22purpose of the ABLE program is to encourage and assist
23individuals and families in saving private funds for the
24purpose of supporting individuals with disabilities to
25maintain health, independence, and quality of life, and to
26provide secure funding for disability-related expenses on

 

 

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1behalf of designated beneficiaries with disabilities that will
2supplement, but not supplant, benefits provided through
3private insurance, federal and State medical and disability
4insurance, the beneficiary's employment, and other sources.
5Under the plan, a person may make contributions to an ABLE
6account to meet the qualified disability expenses of the
7designated beneficiary of the account. The plan must be
8operated as an accounts-type plan that permits persons to save
9for qualified disability expenses incurred by or on behalf of
10an eligible individual.
11    (c) Promotion of the ABLE Program. The State Treasurer
12shall promote awareness of the availability and advantages of
13the ABLE account plan as a way to assist individuals and
14families in saving private funds for the purpose of supporting
15individuals with disabilities.
16    (d) Availability of the ABLE Program. An ABLE account may
17be established under this Section for a designated beneficiary
18who is a resident of Illinois, a resident of a contracting
19state, or a resident of any other state.
20    Annual contributions to an ABLE account on behalf of a
21beneficiary are subject to the requirements of subsection (b)
22of Section 529A of the Internal Revenue Code. No person may
23make a contribution to an ABLE account if such a contribution
24would result in the aggregate account balance of an ABLE
25account exceeding the account balance limit authorized under
26Section 529A of the Internal Revenue Code. The Treasurer shall

 

 

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1review the contribution limit at least annually. A separate
2account must be maintained for each beneficiary for whom
3contributions are made, and no more than one account shall be
4established per beneficiary. If an ABLE account is established
5for a designated beneficiary, no account subsequently
6established for such beneficiary shall be treated as an ABLE
7account. The preceding sentence shall not apply in the case of
8an ABLE account established for purposes of a rollover as
9permitted under Sections 529 and 529A of the Internal Revenue
10Code.
11    (e) Administration of the ABLE Program. The State
12Treasurer shall administer the plan, including accepting and
13processing applications, maintaining account records, making
14payments, and undertaking any other necessary tasks to
15administer the plan, including the appointment of an account
16administrator. The State Treasurer may contract with one or
17more third parties to carry out some or all of these
18administrative duties, including, but not limited to,
19providing investment management services, incentives, and
20marketing the plan. The State Treasurer may enter into
21agreements with other states to either allow Illinois
22residents to participate in a plan operated by another state
23or to allow residents of other states to participate in the
24Illinois ABLE plan.
25    (f) Fees. The State Treasurer may establish fees to be
26imposed on participants to cover the costs of administration,

 

 

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1recordkeeping, and investment management. The State Treasurer
2must use his or her best efforts to keep these fees as low as
3possible, consistent with efficient administration.
4    (g) The Illinois ABLE Accounts Administrative Fund. The
5Illinois ABLE Accounts Administrative Fund is created as a
6nonappropriated trust fund in the State treasury. The State
7Treasurer shall use moneys in the Administrative Fund to cover
8administrative expenses incurred under this Section. The
9Administrative Fund may receive any grants or other moneys
10designated for administrative purposes from the State, or any
11unit of federal, state, or local government, or any other
12person, firm, partnership, or corporation. Any interest
13earnings that are attributable to moneys in the Administrative
14Fund must be deposited into the Administrative Fund. Any fees
15established by the State Treasurer to cover the costs of
16administration, recordkeeping, and investment management shall
17be deposited into the Administrative Fund.
18    Subject to appropriation, the State Treasurer may pay
19administrative costs associated with the creation and
20management of the plan until sufficient assets are available
21in the Administrative Fund for that purpose.
22    (h) Privacy. Applications for accounts, designated
23beneficiary account owner data, account data, and data on
24beneficiaries of accounts are confidential and exempt from
25disclosure under the Freedom of Information Act.
26    (i) Investment Policy. The Treasurer shall prepare and

 

 

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1adopt a written statement of investment policy that includes a
2risk management and oversight program which shall be reviewed
3annually and posted on the Treasurer's website prior to
4implementation. The risk management and oversight program
5shall be designed to ensure that an effective risk management
6system is in place to monitor the risk levels of the ABLE plan,
7to ensure that the risks taken are prudent and properly
8managed, to provide an integrated process for overall risk
9management, and to assess investment returns as well as risk
10to determine if the risks taken are adequately compensated
11compared to applicable performance benchmarks and standards.
12To enhance the safety and liquidity of ABLE accounts, to
13ensure the diversification of the investment portfolio of
14accounts, and in an effort to keep investment dollars in the
15State, the State Treasurer may make a percentage of each
16account available for investment in participating financial
17institutions doing business in the State, except that the
18accounts may be invested without limit in investment options
19from open-ended investment companies registered under Section
2080a of the federal Investment Company Act of 1940. The State
21Treasurer may contract with one or more third parties for
22investment management, recordkeeping, or other services in
23connection with investing the accounts.
24    (j) Investment restrictions. The State Treasurer shall
25ensure that the plan meets the requirements for an ABLE
26account under Section 529A of the Internal Revenue Code. The

 

 

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1State Treasurer may request a private letter ruling or rulings
2from the Internal Revenue Service and must take any necessary
3steps to ensure that the plan qualifies under relevant
4provisions of federal law. Notwithstanding the foregoing, any
5determination by the Secretary of the Treasury of the United
6States that an account was utilized to make non-qualified
7distributions shall not result in an ABLE account being
8disregarded as a resource.
9    (k) Contributions. A person may make contributions to an
10ABLE account on behalf of a beneficiary. Contributions to an
11account made by persons other than the designated beneficiary
12account owner become the property of the designated
13beneficiary account owner. Contributions to an account shall
14be considered as a transfer of assets for fair market value. A
15person does not acquire an interest in an ABLE account by
16making contributions to an account. A contribution to any
17account for a beneficiary must be rejected if the contribution
18would cause either the aggregate or annual account balance of
19the account to exceed the limits imposed by Section 529A of the
20Internal Revenue Code.
21    Any change in designated beneficiary account owner must be
22done in a manner consistent with Section 529A of the Internal
23Revenue Code.
24    (l) Notice. Notice of any proposed amendments to the rules
25and regulations shall be provided to all designated
26beneficiaries owners or their designated representatives prior

 

 

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1to adoption. Amendments to rules and regulations shall apply
2only to contributions made after the adoption of the
3amendment. Amendments to this Section automatically amend the
4participation agreement. Any amendments to the operating
5procedures and policies of the plan shall automatically amend
6the participation agreement after adoption by the State
7Treasurer.
8    (m) Plan assets. All assets of the plan, including any
9contributions to accounts, are held in trust for the exclusive
10benefit of the designated beneficiary account owner and shall
11be considered spendthrift accounts exempt from all of the
12designated beneficiary's owner's creditors. The plan shall
13provide separate accounting for each designated beneficiary
14sufficient to satisfy the requirements of paragraph (3) of
15subsection (b) of Section 529A of the Internal Revenue Code.
16Assets must be held in either a state trust fund outside the
17State treasury, to be known as the Illinois ABLE plan trust
18fund, or in accounts with a third-party provider selected
19pursuant to this Section. Amounts contributed to ABLE accounts
20shall not be commingled with State funds and the State shall
21have no claim to or against, or interest in, such funds.
22    Plan assets are not subject to claims by creditors of the
23State and are not subject to appropriation by the State.
24Payments from the Illinois ABLE account plan shall be made
25under this Section.
26    The assets of ABLE accounts and their income may not be

 

 

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1used as security for a loan.
2    (n) Taxation. The assets of ABLE accounts and their income
3and operation shall be exempt from all taxation by the State of
4Illinois and any of its subdivisions to the extent exempt from
5federal income taxation. The accrued earnings on investments
6in an ABLE account once disbursed on behalf of a designated
7beneficiary shall be similarly exempt from all taxation by the
8State of Illinois and its subdivisions to the extent exempt
9from federal income taxation, so long as they are used for
10qualified expenses.
11    Notwithstanding any other provision of law that requires
12consideration of one or more financial circumstances of an
13individual, for the purpose of determining eligibility to
14receive, or the amount of, any assistance or benefit
15authorized by such provision to be provided to or for the
16benefit of such individual, any amount, including earnings
17thereon, in the ABLE account of such individual, any
18contributions to the ABLE account of the individual, and any
19distribution for qualified disability expenses shall be
20disregarded for such purpose with respect to any period during
21which such individual maintains, makes contributions to, or
22receives distributions from such ABLE account.
23    (o) Distributions. The designated beneficiary account
24owner or the designated representative of the designated
25beneficiary account owner may make a qualified distribution
26for the benefit of the designated beneficiary account owner.

 

 

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1Qualified distributions shall be made for qualified disability
2expenses allowed pursuant to Section 529A of the Internal
3Revenue Code. Qualified distributions must be withdrawn
4proportionally from contributions and earnings in a designated
5beneficiary's an account owner's account on the date of
6distribution as provided in Section 529A of the Internal
7Revenue Code. Unless prohibited by federal law, upon the death
8of a designated beneficiary, proceeds from an account may be
9transferred to the estate of a designated beneficiary, or to
10an account for another eligible individual specified by the
11designated beneficiary or the estate of the designated
12beneficiary, or transferred pursuant to a payable on death
13account agreement. A payable on death account agreement may be
14executed by the designated beneficiary or a designated
15representative who has been granted such power. Upon the death
16of a designated beneficiary, prior to distribution of the
17balance to the estate, account for another eligible
18individual, or transfer pursuant to a payable on death account
19agreement, the State Treasurer may require verification that
20the funeral and burial expenses of the designated beneficiary
21have been paid. An agency or instrumentality of the State may
22not seek payment under subsection (f) of Section 529A of the
23federal Internal Revenue Code from the account or its proceeds
24for benefits provided to a designated beneficiary.
25    (p) Rules. The State Treasurer may adopt rules to carry
26out the purposes of this Section. The State Treasurer shall

 

 

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1further have the power to issue peremptory rules necessary to
2ensure that ABLE accounts meet all of the requirements for a
3qualified state ABLE program under Section 529A of the
4Internal Revenue Code and any regulations issued by the
5Internal Revenue Service.
6(Source: P.A. 100-713, eff. 8-3-18; 101-329, eff. 8-9-19.)
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.