Illinois General Assembly - Full Text of SB2966
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Full Text of SB2966  102nd General Assembly




State of Illinois
2021 and 2022


Introduced 12/15/2021, by Sen. Rachelle Crowe


15 ILCS 505/16.5

    Amends the State Treasurer Act. Provides that "qualified expenses" for purposes of the College Savings Pool includes expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school, as allowed under the Internal Revenue Code. Effective immediately.

LRB102 20459 RJF 29320 b






SB2966LRB102 20459 RJF 29320 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    "Qualified expenses" means: (i) tuition, fees, and the
25costs of books, supplies, and equipment required for
26enrollment or attendance at an eligible educational



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1institution; (ii) expenses for special needs services, in the
2case of a special needs beneficiary, which are incurred in
3connection with such enrollment or attendance; (iii) certain
4expenses, to the extent they qualify as qualified higher
5education expenses under Section 529 of the Internal Revenue
6Code, for the purchase of computer or peripheral equipment 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; (iv) room and board
14expenses incurred while attending an eligible educational
15institution at least half-time; (v) expenses for fees, books,
16supplies, and equipment required for the participation of a
17designated beneficiary in an apprenticeship program registered
18and certified with the Secretary of Labor under the National
19Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
20principal or interest on any qualified education loan of the
21designated beneficiary or a sibling of the designated
22beneficiary, as allowed under Section 529 of the Internal
23Revenue Code; and (vii) expenses for tuition in connection
24with enrollment or attendance at an elementary or secondary
25public, private, or religious school, as allowed under Section
26529 of the Internal Revenue Code. A student shall be



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1considered to be enrolled at least half-time if the student is
2enrolled for at least half the full-time academic workload for
3the course of study the student is pursuing as determined
4under the standards of the institution at which the student is
6    (b) Establishment of the Pool. The State Treasurer may
7establish and administer the College Savings Pool as a
8qualified tuition program under Section 529 of the Internal
9Revenue Code. The Pool may consist of one or more college
10savings programs. The State Treasurer, in administering the
11College Savings Pool, may: (1) receive, hold, and invest
12moneys paid into the Pool; and (2) perform any other action he
13or she deems necessary to administer the Pool, including any
14other actions necessary to ensure that the Pool operates as a
15qualified tuition program in accordance with Section 529 of
16the Internal Revenue Code.
17    (c) Administration of the College Savings Pool. The State
18Treasurer may delegate duties related to the College Savings
19Pool to one or more contractors. The contributions deposited
20in the Pool, and any earnings thereon, shall not constitute
21property of the State or be commingled with State funds and the
22State shall have no claim to or against, or interest in, such
23funds; provided that the fees collected by the State Treasurer
24in accordance with this Act, scholarship programs administered
25by the State Treasurer, and seed funds deposited by the State
26Treasurer under Section 16.8 of the Act are State funds.



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1    (c-5) College Savings Pool Account Summaries. The State
2Treasurer shall provide a separate accounting for each
3designated beneficiary. The separate accounting shall be
4provided to the account owner of the account for the
5designated beneficiary at least annually and shall show the
6account balance, the investment in the account, the investment
7earnings, and the distributions from the account.
8    (d) Availability of the College Savings Pool. The State
9Treasurer may permit persons, including trustees of trusts and
10custodians under a Uniform Transfers to Minors Act or Uniform
11Gifts to Minors Act account, and certain legal entities to be
12account owners, including as part of a scholarship program,
13provided that: (1) an individual, trustee or custodian must
14have a valid social security number or taxpayer identification
15number, be at least 18 years of age, and have a valid United
16States street address; and (2) a legal entity must have a valid
17taxpayer identification number and a valid United States
18street address. In-state and out-of-state persons, trustees,
19custodians, and legal entities may be account owners and
20donors, and both in-state and out-of-state individuals may be
21designated beneficiaries in the College Savings Pool.
22    (e) Fees. Any fees, costs, and expenses, including
23investment fees and expenses and payments to third parties,
24related to the College Savings Pool, shall be paid from the
25assets of the College Savings Pool. The State Treasurer shall
26establish fees to be imposed on accounts to cover such fees,



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1costs, and expenses, to the extent not paid directly out of the
2investments of the College Savings Pool, and to maintain an
3adequate reserve fund in line with industry standards for
4government operated funds. The Treasurer must use his or her
5best efforts to keep these fees as low as possible and
6consistent with administration of high quality competitive
7college savings programs.
8    (f) Investments in the State. To enhance the safety and
9liquidity of the College Savings Pool, to ensure the
10diversification of the investment portfolio of the College
11Savings Pool, and in an effort to keep investment dollars in
12the State of Illinois, the State Treasurer may make a
13percentage of each account available for investment in
14participating financial institutions doing business in the
16    (g) Investment policy. The Treasurer shall develop,
17publish, and implement an investment policy covering the
18investment of the moneys in each of the programs in the College
19Savings Pool. The policy shall be published each year as part
20of the audit of the College Savings Pool by the Auditor
21General, which shall be distributed to all account owners in
22such program. The Treasurer shall notify all account owners in
23such program in writing, and the Treasurer shall publish in a
24newspaper of general circulation in both Chicago and
25Springfield, any changes to the previously published
26investment policy at least 30 calendar days before



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1implementing the policy. Any investment policy adopted by the
2Treasurer shall be reviewed and updated if necessary within 90
3days following the date that the State Treasurer takes office.
4    (h) Investment restrictions. An account owner may,
5directly or indirectly, direct the investment of his or her
6account only as provided in Section 529(b)(4) of the Internal
7Revenue Code. Donors and designated beneficiaries, in those
8capacities, may not, directly or indirectly, direct the
9investment of an account.
10    (i) Distributions. Distributions from an account in the
11College Savings Pool may be used for the designated
12beneficiary's qualified expenses, and if not used in that
13manner, may be considered a nonqualified withdrawal. Funds
14contained in a College Savings Pool account may be rolled over
15into an eligible ABLE account, as defined in Section 16.6 of
16this Act, or another qualified tuition program, to the extent
17permitted by Section 529 of the Internal Revenue Code.
18    Distributions made from the College Savings Pool may be
19made directly to the eligible educational institution,
20directly to a vendor, in the form of a check payable to both
21the designated beneficiary and the institution or vendor,
22directly to the designated beneficiary or account owner, or in
23any other manner that is permissible under Section 529 of the
24Internal Revenue Code.
25    (j) Contributions. Contributions to the College Savings
26Pool shall be as follows:



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



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1    (l) Prohibition; exemption. No interest in the program, or
2any portion thereof, may be used as security for a loan. Moneys
3held in an account invested in the College Savings Pool shall
4be exempt from all claims of the creditors of the account
5owner, donor, or designated beneficiary of that account,
6except for the non-exempt College Savings Pool transfers to or
7from the account as defined under subsection (j) of Section
812-1001 of the Code of Civil Procedure.
9    (m) Taxation. The assets of the College Savings Pool and
10its income and operation shall be exempt from all taxation by
11the State of Illinois and any of its subdivisions. The accrued
12earnings on investments in the Pool once disbursed on behalf
13of a designated beneficiary shall be similarly exempt from all
14taxation by the State of Illinois and its subdivisions, so
15long as they are used for qualified expenses. Contributions to
16a College Savings Pool account during the taxable year may be
17deducted from adjusted gross income as provided in Section 203
18of the Illinois Income Tax Act. The provisions of this
19paragraph are exempt from Section 250 of the Illinois Income
20Tax Act.
21    (n) Rules. The Treasurer shall adopt rules he or she
22considers necessary for the efficient administration of the
23College Savings Pool. The rules shall provide whatever
24additional parameters and restrictions are necessary to ensure
25that the College Savings Pool meets all the requirements for a
26qualified tuition program under Section 529 of the Internal



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1Revenue Code.
2    Notice of any proposed amendments to the rules and
3regulations shall be provided to all account owners prior to
5    (o) Bond. The State Treasurer shall give bond with at
6least one surety, payable to and for the benefit of the account
7owners in the College Savings Pool, in the penal sum of
8$10,000,000, conditioned upon the faithful discharge of his or
9her duties in relation to the College Savings Pool.
10    (p) The changes made to subsections (c) and (e) of this
11Section by Public Act 101-26 are intended to be a restatement
12and clarification of existing law.
13(Source: P.A. 101-26, eff. 6-21-19; 101-81, eff. 7-12-19;
14102-186, eff. 7-30-21.)
15    Section 99. Effective date. This Act takes effect upon
16becoming law.