Illinois General Assembly - Full Text of SB1383
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Full Text of SB1383  99th General Assembly




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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 adding
5Section 16.6 as follows:
6    (15 ILCS 505/16.6 new)
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
14    "ABLE account plan" or "plan" means the savings account
15plan provided for in this Section.
16    "Account administrator" means the person selected by the
17State Treasurer to administer the daily operations of the ABLE
18account plan and provide marketing, recordkeeping, investment
19management, and other services for the plan.
20    "Aggregate account balance" means the amount in an account
21on a particular date or the fair market value of an account on
22a particular date.
23    "Beneficiary" means the ABLE account owner.



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



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1    State Treasurer pursuant to its rules.
2    "Disability certification" has the meaning given to that
3term under Section 529A of the Internal Revenue Code.
4    "Eligible individual" has the meaning given to that term
5under Section 529A of the Internal Revenue Code.
6    "Participation agreement" means an agreement to
7participate in the ABLE account plan between an account owner
8and the State, through its agencies and the State Treasurer.
9    "Qualified disability expenses" has the meaning given to
10that term under Section 529A of the Internal Revenue Code.
11    "Qualified withdrawal" or "qualified distribution" means a
12withdrawal from an ABLE account to pay the qualified disability
13expenses of the beneficiary of the account.
14    (b) The "Achieving a Better Life Experience" or "ABLE"
15account program is hereby created and shall be administered by
16the State Treasurer. The purpose of the ABLE plan is to
17encourage and assist individuals and families in saving private
18funds for the purpose of supporting individuals with
19disabilities to maintain health, independence, and quality of
20life, and to provide secure funding for disability-related
21expenses on behalf of designated beneficiaries with
22disabilities that will supplement, but not supplant, benefits
23provided through private insurance, federal and State medical
24and disability insurance, the beneficiary's employment, and
25other sources. Under the plan, a person may make contributions
26to an ABLE account to meet the qualified disability expenses of



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1the designated beneficiary of the account. The plan must be
2operated as an accounts-type plan that permits persons to save
3for qualified disability expenses incurred by or on behalf of
4an eligible individual.
5    The State Treasurer shall promote awareness of the
6availability and advantages of the ABLE account plan as a way
7to assist individuals and families in saving private funds for
8the purpose of supporting individuals with disabilities. The
9cost of these promotional efforts shall not be funded with fees
10imposed on participants by the State Treasurer.
11    The State Treasurer shall not accept contributions for ABLE
12accounts under this Section until the Internal Revenue Service
13has issued its final regulations concerning ABLE accounts.
14    A separate account must be maintained for each beneficiary
15for whom contributions are made, and no more than one account
16shall be established per beneficiary. If an ABLE account is
17established for a designated beneficiary, no account
18subsequently established for such beneficiary shall be treated
19as an ABLE account. The preceding sentence shall not apply in
20the case of an ABLE account established for purposes of a
21rollover as permitted under Section 529A of the Internal
22Revenue Code.
23    An ABLE account may be established under this Section only
24for a designated beneficiary who is a resident of Illinois or a
25resident of a contracting state.
26    Prior to the establishment of an ABLE account, an account



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1owner must provide documentation to the State Treasurer that
2the account beneficiary is an eligible individual.
3    Annual contributions to an ABLE account on behalf of a
4beneficiary are subject to the requirements of subsection (b)
5of Section 529A of the Internal Revenue Code. No person may
6make a contribution to an ABLE account if such a contribution
7would result in the aggregate account balance of an ABLE
8account exceeding the account balance limit authorized under
9Section 529A of the Internal Revenue Code. The Treasurer shall
10review the contribution limit at least annually.
11    The State Treasurer shall administer the plan, including
12accepting and processing applications, maintaining account
13records, making payments, and undertaking any other necessary
14tasks to administer the plan, including the appointment of an
15account administrator. The State Treasurer may contract with
16one or more third parties to carry out some or all of these
17administrative duties, including, but not limited to,
18providing investment management services, incentives, and
19marketing the plan.
20    In designing and establishing the plan's requirements and
21in negotiating or entering into contracts with third parties
22under this Section, the State Treasurer shall consult with the
23Board. The State Treasurer shall establish fees to be imposed
24on participants to recover the costs of administration,
25recordkeeping, and investment management. The State Treasurer
26must use his or her best efforts to keep these fees as low as



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1possible, consistent with efficient administration.
2    The Illinois ABLE Accounts Administrative Fund is created
3as a nonappropriated trust fund in the State treasury. The
4State Treasurer shall use moneys in the Administrative Fund to
5pay for administrative expenses he or she incurs in the
6performance of his or her duties under this Section. 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 or local government, or any other person, firm,
12partnership, or corporation. Any interest earnings that are
13attributable to moneys in the Administrative Fund must be
14deposited into the Administrative Fund. Any fees established by
15the State Treasurer to recover the costs of administration,
16recordkeeping, and investment management shall be deposited
17into 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 in
21the Administrative Fund for that purpose.
22    Applications for accounts, account owner data, account
23data, and data on beneficiaries of accounts are confidential
24and exempt from disclosure under the Freedom of Information
26    (c) The State Treasurer may invest the moneys in ABLE



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1accounts in the same manner and in the same types of
2investments provided for the investment of moneys by the Board.
3To enhance the safety and liquidity of ABLE accounts, to ensure
4the diversification of the investment portfolio of accounts,
5and in an effort to keep investment dollars in the State, the
6State Treasurer may make a percentage of each account available
7for investment in participating financial institutions doing
8business in the State, except that the accounts may be invested
9without limit in investment options from open-ended investment
10companies registered under Section 4.32 of the federal
11Investment Company Act of 1940. The State Treasurer may
12contract with one or more third parties for investment
13management, recordkeeping, or other services in connection
14with investing the accounts.
15    The account administrator shall annually prepare and adopt
16a written statement of investment policy that includes a risk
17management and oversight program. The risk management and
18oversight program shall be designed to ensure that an effective
19risk management system is in place to monitor the risk levels
20of the ABLE plan, to ensure that the risks taken are prudent
21and properly managed, to provide an integrated process for
22overall risk management, and to assess investment returns as
23well as risk to determine if the risks taken are adequately
24compensated compared to applicable performance benchmarks and
26    The State Treasurer may enter into agreements with other



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



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



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1    The assets of ABLE accounts and their income may not be
2used as security for a loan.
3    The assets of ABLE accounts and their income and operation
4shall be exempt from all taxation by the State of Illinois and
5any of its subdivisions to the extent exempt from federal
6income taxation. The accrued earnings on investments in an ABLE
7account once disbursed on behalf of a designated beneficiary
8shall be similarly exempt from all taxation by the State of
9Illinois and its subdivisions to the extent exempt from federal
10income taxation, so long as they are used for qualified
12    Notwithstanding any other provision of law that requires
13consideration of one or more financial circumstances of an
14individual, for the purpose of determining eligibility to
15receive, or the amount of, any assistance or benefit authorized
16by such provision to be provided to or for the benefit of such
17individual, any amount, including earnings thereon, in the ABLE
18account of such individual, any contributions to the ABLE
19account of the individual, and any distribution for qualified
20disability expenses shall be disregarded for such purpose with
21respect to any period during which such individual maintains,
22makes contributions to, or receives distributions from such
23ABLE account.
24    (e) The account owner or the designated representative of
25the account owner may request that a qualified distribution be
26made for the benefit of the account owner. Qualified



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1distributions shall be made for qualified disability expenses
2allowed pursuant to Section 529A of the Internal Revenue Code.
3Qualified distributions must be withdrawn proportionally from
4contributions and earnings in an account owner's account on the
5date of distribution as provided in Section 529A of the
6Internal Revenue Code. Upon the death of a beneficiary, the
7amount remaining in the beneficiary's account must be
8distributed pursuant to subsection (f) of Section 529A of the
9Internal Revenue Code.
10    (f) The State Treasurer may adopt rules to carry out the
11purposes of this Section. The State Treasurer shall further
12have the power to issue peremptory rules necessary to ensure
13that ABLE accounts meet all of the requirements for a qualified
14state ABLE program under Section 529A of the Internal Revenue
15Code and any regulations issued by the Internal Revenue
17    Section 10. The State Finance Act is amended by adding
18Section 5.866 as follows:
19    (30 ILCS 105/5.866 new)
20    Sec. 5.866. The Illinois ABLE Accounts Administrative