Illinois General Assembly - Full Text of HB2004
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Full Text of HB2004  102nd General Assembly



State of Illinois
2021 and 2022


Introduced 2/17/2021, by Rep. Jim Durkin


15 ILCS 505/16.5

    Amends the State Treasurer Act. Makes a technical change in a Section concerning a college savings pool.

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HB2004LRB102 12220 RJF 17557 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 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. "Eligible educational
16institutions", as used in this Section, means public and
17private colleges, junior colleges, graduate schools, and
18certain vocational institutions that are described in Section
191001 of the Higher Education Resource and Student Assistance
20Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
21and that are eligible to participate in Department of
22Education student aid programs. A student shall be considered
23to be enrolled at least half-time if the student is enrolled
24for at least half the full-time academic workload for the
25course of study the student is pursuing as determined under
26the standards of the institution at which the student is



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



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



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1diversification of the investment portfolio of the College
2Savings Pool, and in an effort to keep investment dollars in
3the State of Illinois, the State Treasurer may make a
4percentage of each account available for investment in
5participating financial institutions doing business in the
7    (g) Investment policy. The Treasurer shall develop,
8publish, and implement an investment policy covering the
9investment of the moneys in each of the programs in the College
10Savings Pool. The policy shall be published each year as part
11of the audit of the College Savings Pool by the Auditor
12General, which shall be distributed to all account owners in
13such program. The Treasurer shall notify all account owners in
14such program in writing, and the Treasurer shall publish in a
15newspaper of general circulation in both Chicago and
16Springfield, any changes to the previously published
17investment policy at least 30 calendar days before
18implementing the policy. Any investment policy adopted by the
19Treasurer shall be reviewed and updated if necessary within 90
20days following the date that the State Treasurer takes office.
21    (h) Investment restrictions. An account owner may,
22directly or indirectly, direct the investment of any
23contributions to the College Savings Pool (or any earnings
24thereon) only as provided in Section 529(b)(4) of the Internal
25Revenue Code. Donors and designated beneficiaries, in those
26capacities, may not, directly or indirectly, direct the



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



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



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1of the Illinois Student Assistance Commission.
2    (l) Prohibition; exemption. No interest in the program, or
3any portion thereof, may be used as security for a loan. Moneys
4held in an account invested in the College Savings Pool shall
5be exempt from all claims of the creditors of the account
6owner, donor, or designated beneficiary of that account,
7except for the non-exempt College Savings Pool transfers to or
8from the account as defined under subsection (j) of Section
912-1001 of the Code of Civil Procedure.
10    (m) Taxation. The assets of the College Savings Pool and
11its income and operation shall be exempt from all taxation by
12the State of Illinois and any of its subdivisions. The accrued
13earnings on investments in the Pool once disbursed on behalf
14of a designated beneficiary shall be similarly exempt from all
15taxation by the State of Illinois and its subdivisions, so
16long as they are used for qualified expenses. Contributions to
17a College Savings Pool account during the taxable year may be
18deducted from adjusted gross income as provided in Section 203
19of the Illinois Income Tax Act. The provisions of this
20paragraph are exempt from Section 250 of the Illinois Income
21Tax Act.
22    (n) Rules. The Treasurer shall adopt rules he or she
23considers necessary for the efficient administration of the
24College Savings Pool. The rules shall provide whatever
25additional parameters and restrictions are necessary to ensure
26that the College Savings Pool meets all the requirements for a



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1qualified tuition program under Section 529 of the Internal
2Revenue Code.
3    The rules shall require the maintenance of records that
4enable the Treasurer's office to produce a report for each
5account in the Pool at least annually that documents the
6account balance and investment earnings.
7    Notice of any proposed amendments to the rules and
8regulations shall be provided to all account owners prior to
10    (o) Bond. The State Treasurer shall give bond with at
11least one surety, payable to and for the benefit of the account
12owners in the College Savings Pool, in the penal sum of
13$10,000,000, conditioned upon the faithful discharge of his or
14her duties in relation to the College Savings Pool.
15    (p) The changes made to subsections (c) and (e) of this
16Section by this amendatory Act of the 101st General Assembly
17are intended to be a restatement and clarification of existing
19(Source: P.A. 100-161, eff. 8-18-17; 100-863, eff. 8-14-18;
20100-905, eff. 8-17-18; 101-26, eff. 6-21-19; 101-81, eff.