HB3360 99TH GENERAL ASSEMBLY

LRB099 04289 JLK 24314 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3360

Introduced , by Rep. Laura Fine

SYNOPSIS AS INTRODUCED:

15 ILCS 505/16.6 new

Amends the State Treasurer Act. Creates the "Achieving a Better Life Experience" or "ABLE" account plan to encourage and assist individuals and families in saving private funds for the purpose of supporting persons with disabilities in endeavors to maintain health, independence, and quality of life. and to provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, federal and State medical and disability insurance, the beneficiary's employment, and other sources. Provides that the State Treasurer shall be primarily responsible for the plan but shall work with the Illinois State Board of Investment. Sets forth the requirements of the plan. Requires the State Treasurer to adopt rules to implement the program. Defines required terms. Effective immediately.

A BILL FOR

AN ACT concerning State government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The State Treasurer Act is amended by adding Section 16.6 as follows:

(15 ILCS 505/16.6 new)

Sec. 16.6. ABLE account program.

(a) As used in this Section,

"ABLE account" and "account" means an account established for the purpose of financing certain qualified expenses of persons with disabilities as set forth in this Section.

"ABLE account plan" and "plan" mean the savings account plan provided for in this Section.

"Beneficiary" means the ABLE account owner, or the person entitled to apply the savings accrued in an ABLE account, if that person is not the account owner.

"Executive Director" means the Executive Director of the Illinois State Board of Investment.

"Individual with a disability" means an individual who, before the date on which the individual attains age 26: (1) has a medically determinable physical or mental impairment, which results in marked and severe functional limitations and which can be expected to result in death, or which has lasted or can be expected to last for a continuous period of not less than 12 months; or (2) is blind.

"Participating financial institution" means any financial institution insured by the Federal Deposit Insurance Corporation and lawfully doing business in the State of Illinois and any credit union approved by the State Treasurer and lawfully doing business in the State of Illinois that agrees to process new accounts in the ABLE account program.

"Qualified disability expense" means an expense made for the benefit of an individual with a disability who is the beneficiary of an ABLE account, which includes, but is not limited to, education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention, and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses, and other expenses consistent with the purpose of this Section that are approved by the Treasurer and provided for by rule.

"Qualified distribution" means a distribution from an ABLE account used to pay for a qualified expense. "Qualified distribution" also includes investment earnings generated by the ABLE account.

"Qualified withdrawal" means a withdrawal from an ABLE account to pay a qualified disability expense of the beneficiary of the account. A qualified withdrawal may be made by an agent of the beneficiary who has the power of attorney or by the beneficiary's legal guardian.

(b) The "Achieving a Better Life Experience" or "ABLE" account plan is hereby created to encourage and assist individuals and families in saving private funds for the purpose of supporting persons with disabilities in endeavors to maintain health, independence, and quality of life, and to provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, federal and State medical and disability insurance, the beneficiary's employment, and other sources. The Department of Human Services shall certify to the Treasurer that a person qualifies as an individual with a disability eligible for an ABLE account.

New accounts in the ABLE account program may be processed through participating financial institutions. Participating financial institutions may charge a processing fee to participants to open an account in the program. Every contribution received by a financial institution for investment in the ABLE account program shall be transferred from the financial institution to a location selected by the State Treasurer within one business day following the day that the funds must be made available in accordance with federal law. All communications from the State Treasurer to participants and donors shall reference the participating financial institution at which the account was processed.

The Treasurer may invest the moneys in the ABLE account program in the same manner and in the same types of investments provided for the investment of moneys by the Illinois State Board of Investment. To enhance the safety and liquidity of the ABLE account program, to ensure the diversification of the investment portfolio of the pool, and in an effort to keep investment dollars in the State of Illinois, the State Treasurer may make a percentage of each account available for investment in participating financial institutions doing business in the State.

Under the plan, which must be operated as an accounts-type plan, a person may make contributions to an ABLE account to meet the qualified disability expenses incurred by or on behalf of the designated beneficiary of the account. Contributions to and the maximum balance of an ABLE account are subject to the requirements of subsection (b) of section 529A of the Internal Revenue Code. The beneficiary must be a resident of the state in which the ABLE account is opened or in a state that has a memorandum of understanding with another state to provide an ABLE account. A separate account must be maintained for each beneficiary for whom contributions are made, and no more than one account shall be established per beneficiary. Qualified distributions may be made directly to the account owner or beneficiary either before or after a qualified expense is made. Distributions from an ABLE account that are not used for a qualified expense are subject to income tax on the portion of such distribution attributable to earnings from the account, in addition to a 10% penalty. Upon the death of a beneficiary, the amount remaining in a beneficiary's ABLE account must be distributed in accordance with subsection (f) of section 529A of the Internal Revenue Code. The provisions of this Section are exempt from taxation under Section 250 of the Illinois Income Tax Act and any other tax imposed by the State of Illinois or any of its subdivisions so long as distributions are used for qualified expenses.

In designing and establishing the plan's requirements and in negotiating or entering into contracts with third parties, the Treasurer shall consult with the Executive Director. The Treasurer and the Executive Director shall establish an annual fee, equal to a percentage of the average daily assets of the plan, to be imposed on participants to recover the costs of administration, recordkeeping, and investment management. The State Treasurer shall administer the plan, including accepting and processing applications, maintaining account records, making payments, and undertaking any other necessary tasks to administer the plan. Notwithstanding other requirements of this Section, the State Treasurer shall adopt rules for purposes of implementing and administering the plan and obtaining certification of eligible beneficiaries from the Department of Human Services.

(c) The State Treasurer shall ensure that the plan meets the requirements for an ABLE account under Section 529 of the Internal Revenue Code. In doing so, the Treasurer shall adopt rules and establish guidelines as necessary to ensure this compliance.

(d) The State Treasurer shall promote awareness of the availability and advantages of the ABLE account program as a way to assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities. The Treasurer's office shall not publicize or otherwise market the ABLE account program or accept any moneys into the ABLE account program until the Internal Revenue Service issues its final regulations concerning State ABLE account programs.

(e) The State Treasurer may adopt any other rules necessary to implement the requirements of this Section.

Section 99. Effective date. This Act takes effect upon becoming law.