Illinois General Assembly - Full Text of SB0558
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Full Text of SB0558  102nd General Assembly




SB0558 EngrossedLRB102 16592 RJF 21989 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    "Member of the family" has the same meaning ascribed to
3that term under Section 529 of the Internal Revenue Code.
4    "Nonqualified withdrawal" means a distribution from an
5account other than a distribution that (i) is used for the
6qualified expenses of the designated beneficiary; (ii) results
7from the beneficiary's death or disability; (iii) is a
8rollover to another account in the College Savings Pool; or
9(iv) is a rollover to an ABLE account, as defined in Section
1016.6 of this Act, or any distribution that, within 60 days
11after such distribution, is transferred to an ABLE account of
12the designated beneficiary or a member of the family of the
13designated beneficiary to the extent that the distribution,
14when added to all other contributions made to the ABLE account
15for the taxable year, does not exceed the limitation under
16Section 529A(b) of the Internal Revenue Code.
17    "Program manager" means any financial institution or
18entity lawfully doing business in the State of Illinois
19selected by the State Treasurer to oversee the recordkeeping,
20custody, customer service, investment management, and
21marketing for one or more of the programs in the College
22Savings Pool.
23    "Qualified expenses" means: (i) tuition, fees, and the
24costs of books, supplies, and equipment required for
25enrollment or attendance at an eligible educational
26institution; (ii) expenses for special needs services, in the



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1case of a special needs beneficiary, which are incurred in
2connection with such enrollment or attendance; (iii) certain
3expenses for the purchase of computer or peripheral equipment,
4as defined in Section 168 of the federal Internal Revenue Code
5(26 U.S.C. 168), computer software, as defined in Section 197
6of the federal Internal Revenue Code (26 U.S.C. 197), or
7Internet access and related services, if such equipment,
8software, or services are to be used primarily by the
9beneficiary during any of the years the beneficiary is
10enrolled at an eligible educational institution, except that,
11such expenses shall not include expenses for computer software
12designed for sports, games, or hobbies, unless the software is
13predominantly educational in nature; and (iv) room and board
14expenses incurred while attending an eligible educational
15institution at least half-time; and (v) qualified higher
16education expenses as defined in Section 529 of the Internal
17Revenue Code. "Eligible educational institutions", as used in
18this Section, means public and private colleges, junior
19colleges, graduate schools, and certain vocational
20institutions that are described in Section 1001 of the Higher
21Education Resource and Student Assistance Chapter of Title 20
22of the United States Code (20 U.S.C. 1001) and that are
23eligible to participate in Department of Education student aid
24programs. A student shall be considered to be enrolled at
25least half-time if the student is enrolled for at least half
26the full-time academic workload for the course of study the



SB0558 Engrossed- 4 -LRB102 16592 RJF 21989 b

1student is pursuing as determined under the standards of the
2institution at which the student is enrolled.
3    (b) Establishment of the Pool. The State Treasurer may
4establish and administer the College Savings Pool as a
5qualified tuition program under Section 529 of the Internal
6Revenue Code. The Pool may consist of one or more college
7savings programs. The State Treasurer, in administering the
8College Savings Pool, may receive, hold, and invest moneys
9paid into the Pool and perform such other actions as are
10necessary to ensure that the Pool operates as a qualified
11tuition program in accordance with Section 529 of the Internal
12Revenue Code.
13    (c) Administration of the College Savings Pool. The State
14Treasurer may engage one or more financial institutions to
15handle the overall administration, investment management,
16recordkeeping, and marketing of the programs in the College
17Savings Pool. The contributions deposited in the Pool, and any
18earnings thereon, shall not constitute property of the State
19or be commingled with State funds and the State shall have no
20claim to or against, or interest in, such funds; provided that
21the State Treasurer may collect fees in accordance with this
23    (c-5) The State Treasurer shall provide a separate
24accounting for each designated beneficiary. The separate
25accounting shall be provided to the account owner of the
26account for the designated beneficiary at least annually and



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1shall show the account balance, the investment in the account,
2the investment earnings, and the distributions from the
4    (d) Availability of the College Savings Pool. The State
5Treasurer may permit persons, including trustees of trusts and
6custodians under a Uniform Transfers to Minors Act or Uniform
7Gifts to Minors Act account, and certain legal entities to be
8account owners, including as part of a scholarship program,
9provided that: (1) an individual, trustee or custodian must
10have a valid social security number or taxpayer identification
11number, be at least 18 years of age, and have a valid United
12States street address; and (2) a legal entity must have a valid
13taxpayer identification number and a valid United States
14street address. Both in-state and out-of-state persons may be
15account owners and donors, and both in-state and out-of-state
16individuals may be designated beneficiaries in the College
17Savings Pool.
18    (e) Fees. The State Treasurer shall establish fees to be
19imposed on accounts to cover the costs of administration,
20recordkeeping, and investment management. The Treasurer must
21use his or her best efforts to keep these fees as low as
22possible and consistent with administration of high quality
23competitive college savings programs. Administrative fees,
24costs, and expenses, including investment fees and expenses,
25shall be paid from the assets of the College Savings Pool.
26    (f) Investments in the State. To enhance the safety and



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1liquidity of the College Savings Pool, to ensure the
2diversification of the investment portfolio of the College
3Savings Pool, and in an effort to keep investment dollars in
4the State of Illinois, the State Treasurer may make a
5percentage of each account available for investment in
6participating financial institutions doing business in the
8    (g) Investment policy. The Treasurer shall develop,
9publish, and implement an investment policy covering the
10investment of the moneys in each of the programs in the College
11Savings Pool. The policy shall be published each year as part
12of the audit of the College Savings Pool by the Auditor
13General, which shall be distributed to all account owners in
14such program. The Treasurer shall notify all account owners in
15such program in writing, and the Treasurer shall publish in a
16newspaper of general circulation in both Chicago and
17Springfield, any changes to the previously published
18investment policy at least 30 calendar days before
19implementing the policy. Any investment policy adopted by the
20Treasurer shall be reviewed and updated if necessary within 90
21days following the date that the State Treasurer takes office.
22    (h) Investment restrictions. An account owner may,
23directly or indirectly, direct the investment of any
24contributions to the College Savings Pool (or any earnings
25thereon) only as provided in Section 529(b)(4) of the Internal
26Revenue Code. Donors and designated beneficiaries, in those



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



SB0558 Engrossed- 8 -LRB102 16592 RJF 21989 b

1    designated beneficiary. The Pool shall not permit any
2    additional contributions to an account as soon as the
3    aggregate accounts for the designated beneficiary in the
4    Pool reach a specified account balance limit applicable to
5    all designated beneficiaries.
6        (3) The contributions made on behalf of a designated
7    beneficiary who is also a beneficiary under the Illinois
8    Prepaid Tuition Program shall be further restricted to
9    ensure that the contributions in both programs combined do
10    not exceed the limit established for the College Savings
11    Pool.
12    (k) Illinois Student Assistance Commission. The Treasurer
13shall provide the Illinois Student Assistance Commission each
14year at a time designated by the Commission, an electronic
15report of all account owner accounts in the Treasurer's
16College Savings Pool, listing total contributions and
17disbursements from each individual account during the previous
18calendar year. As soon thereafter as is possible following
19receipt of the Treasurer's report, the Illinois Student
20Assistance Commission shall, in turn, provide the Treasurer
21with an electronic report listing those College Savings Pool
22account owners who also participate in the Illinois Prepaid
23Tuition Program, administered by the Commission.
24    The Treasurer shall work with the Illinois Student
25Assistance Commission to coordinate the marketing of the
26College Savings Pool and the Illinois Prepaid Tuition Program



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1when considered beneficial by the Treasurer and the Director
2of the Illinois Student Assistance Commission.
3    (l) Prohibition; exemption. No interest in the program, or
4any portion thereof, may be used as security for a loan. Moneys
5held in an account invested in the College Savings Pool shall
6be exempt from all claims of the creditors of the account
7owner, donor, or designated beneficiary of that account,
8except for the non-exempt College Savings Pool transfers to or
9from the account as defined under subsection (j) of Section
1012-1001 of the Code of Civil Procedure.
11    (m) Taxation. The assets of the College Savings Pool and
12its income and operation shall be exempt from all taxation by
13the State of Illinois and any of its subdivisions. The accrued
14earnings on investments in the Pool once disbursed on behalf
15of a designated beneficiary shall be similarly exempt from all
16taxation by the State of Illinois and its subdivisions, so
17long as they are used for qualified expenses. Contributions to
18a College Savings Pool account during the taxable year may be
19deducted from adjusted gross income as provided in Section 203
20of the Illinois Income Tax Act. The provisions of this
21paragraph are exempt from Section 250 of the Illinois Income
22Tax Act.
23    (n) Rules. The Treasurer shall adopt rules he or she
24considers necessary for the efficient administration of the
25College Savings Pool. The rules shall provide whatever
26additional parameters and restrictions are necessary to ensure



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1that the College Savings Pool meets all the requirements for a
2qualified tuition program under Section 529 of the Internal
3Revenue Code.
4    The rules shall require the maintenance of records that
5enable the Treasurer's office to produce a report for each
6account in the Pool at least annually that documents the
7account balance and investment earnings.
8    Notice of any proposed amendments to the rules and
9regulations shall be provided to all account owners prior to
11    (o) Bond. The State Treasurer shall give bond with at
12least one surety, payable to and for the benefit of the account
13owners in the College Savings Pool, in the penal sum of
14$10,000,000, conditioned upon the faithful discharge of his or
15her duties in relation to the College Savings Pool.
16    (p) The changes made to subsections (c) and (e) of this
17Section by this amendatory Act of the 101st General Assembly
18are intended to be a restatement and clarification of existing
20(Source: P.A. 100-161, eff. 8-18-17; 100-863, eff. 8-14-18;
21100-905, eff. 8-17-18; 101-26, eff. 6-21-19; 101-81, eff.