Full Text of HB2004 102nd General Assembly
HB2004 102ND GENERAL ASSEMBLY |
| | 102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022 HB2004 Introduced 2/17/2021, by Rep. Jim Durkin SYNOPSIS AS INTRODUCED: | | |
Amends the State Treasurer Act. Makes a technical change in a Section
concerning a college savings pool.
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| | A BILL FOR |
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| 1 | | AN ACT concerning State government.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The State Treasurer Act is amended by changing | 5 | | Section 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 | 10 | | an account or to whom ownership of an account has been | 11 | | transferred, as allowed by the Internal Revenue Code, and who | 12 | | has authority to withdraw funds, direct withdrawal of funds, | 13 | | change the designated beneficiary, or otherwise exercise | 14 | | control over an account in the College Savings Pool. | 15 | | "Donor" means any person or entity who makes contributions | 16 | | to an account in the College Savings Pool. | 17 | | "Designated beneficiary" means any individual designated | 18 | | as the beneficiary of an account in the College Savings Pool by | 19 | | an account owner. A designated beneficiary must have a valid | 20 | | social security number or taxpayer identification number. In | 21 | | the case of an account established as part of a scholarship | 22 | | program permitted under Section 529 of the Internal Revenue | 23 | | Code, the designated beneficiary is any individual receiving |
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| 1 | | benefits accumulated in the account as a scholarship. | 2 | | "Member of the family" has the same meaning ascribed to | 3 | | that term under Section 529 of the Internal Revenue Code. | 4 | | "Nonqualified withdrawal" means a distribution from an | 5 | | account other than a distribution that (i) is used for the | 6 | | qualified expenses of the designated beneficiary; (ii) results | 7 | | from the beneficiary's death or disability; (iii) is a | 8 | | rollover to another account in the College Savings Pool; or | 9 | | (iv) is a rollover to an ABLE account, as defined in Section | 10 | | 16.6 of this Act, or any distribution that, within 60 days | 11 | | after such distribution, is transferred to an ABLE account of | 12 | | the designated beneficiary or a member of the family of the | 13 | | designated beneficiary to the extent that the distribution, | 14 | | when added to all other contributions made to the ABLE account | 15 | | for the taxable year, does not exceed the limitation under | 16 | | Section 529A(b) of the Internal Revenue Code. | 17 | | "Program manager" means any financial institution or | 18 | | entity lawfully doing business in the State of Illinois | 19 | | selected by the State Treasurer to oversee the recordkeeping, | 20 | | custody, customer service, investment management, and | 21 | | marketing for one or more of the programs in the College | 22 | | Savings Pool. | 23 | | "Qualified expenses" means: (i) tuition, fees, and the | 24 | | costs of books, supplies, and equipment required for | 25 | | enrollment or attendance at an eligible educational | 26 | | institution; (ii) expenses for special needs services, in the |
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| 1 | | case of a special needs beneficiary, which are incurred in | 2 | | connection with such enrollment or attendance; (iii) certain | 3 | | expenses for the purchase of computer or peripheral equipment, | 4 | | as defined in Section 168 of the federal Internal Revenue Code | 5 | | (26 U.S.C. 168), computer software, as defined in Section 197 | 6 | | of the federal Internal Revenue Code (26 U.S.C. 197), or | 7 | | Internet access and related services, if such equipment, | 8 | | software, or services are to be used primarily by the | 9 | | beneficiary during any of the years the beneficiary is | 10 | | enrolled at an eligible educational institution, except that, | 11 | | such expenses shall not include expenses for computer software | 12 | | designed for sports, games, or hobbies, unless the software is | 13 | | predominantly educational in nature; and (iv) room and board | 14 | | expenses incurred while attending an eligible educational | 15 | | institution at least half-time. "Eligible educational | 16 | | institutions", as used in this Section, means public and | 17 | | private colleges, junior colleges, graduate schools, and | 18 | | certain vocational institutions that are described in Section | 19 | | 1001 of the Higher Education Resource and Student Assistance | 20 | | Chapter of Title 20 of the United States Code (20 U.S.C. 1001) | 21 | | and that are eligible to participate in Department of | 22 | | Education student aid programs. A student shall be considered | 23 | | to be enrolled at least half-time if the student is enrolled | 24 | | for at least half the full-time academic workload for the | 25 | | course of study the student is pursuing as determined under | 26 | | the standards of the institution at which the student is |
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| 1 | | enrolled. | 2 | | (b) Establishment of the Pool. The State Treasurer may | 3 | | establish and
administer the College Savings Pool as a | 4 | | qualified tuition program under Section 529 of the Internal | 5 | | Revenue Code. The Pool may consist of one or more college | 6 | | savings programs. The State Treasurer, in administering the | 7 | | College Savings
Pool, may receive, hold, and invest moneys | 8 | | paid into the Pool and perform such other actions as are | 9 | | necessary to ensure that the Pool operates as a qualified | 10 | | tuition program in accordance with Section 529 of the Internal | 11 | | Revenue Code.
| 12 | | (c) Administration of the College Savings Pool. The State | 13 | | Treasurer may engage one or more financial institutions to | 14 | | handle the overall administration, investment management, | 15 | | recordkeeping, and marketing of the programs in the College | 16 | | Savings Pool. The contributions deposited in the Pool, and any | 17 | | earnings thereon, shall not constitute property of the State | 18 | | or be commingled with State funds and the State shall have no | 19 | | claim to or against, or interest in, such funds; provided that | 20 | | the State Treasurer may collect fees in accordance with this | 21 | | Act.
| 22 | | (c-5) The State Treasurer shall provide a separate | 23 | | accounting for each designated beneficiary. The separate | 24 | | accounting shall be provided to the account owner of the | 25 | | account for the designated beneficiary at least annually and | 26 | | shall show the account balance, the investment in the account, |
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| 1 | | the investment earnings, and the distributions from the | 2 | | account. | 3 | | (d) Availability of the College Savings Pool. The State | 4 | | Treasurer may permit persons, including trustees of trusts and | 5 | | custodians under a Uniform Transfers to Minors Act or Uniform | 6 | | Gifts to Minors Act account, and certain legal entities to be | 7 | | account owners, including as part of a scholarship program, | 8 | | provided that: (1) an individual, trustee or custodian must | 9 | | have a valid social security number or taxpayer identification | 10 | | number, be at least 18 years of age, and have a valid United | 11 | | States street address; and (2) a legal entity must have a valid | 12 | | taxpayer identification number and a valid United States | 13 | | street address. Both in-state and out-of-state persons may be | 14 | | account owners and donors, and both in-state and out-of-state | 15 | | individuals may be designated beneficiaries in the College | 16 | | Savings Pool. | 17 | | (e) Fees. The State Treasurer shall establish fees to be | 18 | | imposed on accounts to cover the costs of administration, | 19 | | recordkeeping, and investment management. The Treasurer must | 20 | | use his or her best efforts to keep these fees as low as | 21 | | possible and consistent with administration of high quality | 22 | | competitive college savings programs. Administrative fees, | 23 | | costs, and expenses, including investment fees and expenses, | 24 | | shall be paid from the assets of the College Savings Pool. | 25 | | (f) Investments in the State. To enhance the safety and | 26 | | liquidity of the College Savings Pool,
to ensure the |
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| 1 | | diversification of the investment portfolio of the College | 2 | | Savings Pool, and in
an effort to keep investment dollars in | 3 | | the State of Illinois, the State
Treasurer may make a | 4 | | percentage of each account available for investment in
| 5 | | participating financial institutions doing business in the | 6 | | State.
| 7 | | (g) Investment policy. The Treasurer shall develop, | 8 | | publish, and implement an investment policy
covering the | 9 | | investment of the moneys in each of the programs in the College | 10 | | Savings Pool. The policy
shall be published each year as part
| 11 | | of the audit of the College Savings Pool by the Auditor | 12 | | General, which shall be
distributed to all account owners in | 13 | | such program. The Treasurer shall notify all account owners in | 14 | | such program
in writing, and the Treasurer shall publish in a | 15 | | newspaper of general
circulation in both Chicago and | 16 | | Springfield, any changes to the previously
published | 17 | | investment policy at least 30 calendar days before | 18 | | implementing the
policy. Any investment policy adopted by the | 19 | | Treasurer shall be reviewed and
updated if necessary within 90 | 20 | | days following the date that the State Treasurer
takes office.
| 21 | | (h) Investment restrictions. An account owner may, | 22 | | directly or indirectly, direct the investment of any | 23 | | contributions to the College Savings Pool (or any earnings | 24 | | thereon) only as provided in Section 529(b)(4) of the Internal | 25 | | Revenue Code. Donors and designated beneficiaries, in those | 26 | | capacities, may not, directly or indirectly, direct the |
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| 1 | | investment of any contributions to the Pool (or any earnings | 2 | | thereon). | 3 | | (i) Distributions. Distributions from an account in the | 4 | | College
Savings Pool may be used for the designated | 5 | | beneficiary's qualified expenses. Funds contained in a College | 6 | | Savings Pool account may be rolled over into an eligible ABLE | 7 | | account, as defined in Section 16.6 of this Act, to the extent | 8 | | permitted by Section 529 of the Internal Revenue Code. | 9 | | Distributions made from the College Savings Pool may be
| 10 | | made directly to the eligible educational institution, | 11 | | directly to a vendor,
in the form of a check payable to both | 12 | | the designated beneficiary and the institution or
vendor, | 13 | | directly to the designated beneficiary or account owner, or in | 14 | | any other manner that is permissible under Section 529 of the | 15 | | Internal Revenue Code.
| 16 | | (j) Contributions. Contributions to the College Savings | 17 | | Pool 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 | 12 | | shall provide the Illinois Student Assistance Commission
each | 13 | | year at a time designated by the Commission, an electronic | 14 | | report of all account owner
accounts in the Treasurer's | 15 | | College Savings Pool, listing total
contributions and | 16 | | disbursements from each individual account during the
previous | 17 | | calendar year. As soon thereafter as is possible following | 18 | | receipt of
the Treasurer's report, the Illinois Student | 19 | | Assistance Commission shall, in
turn, provide the Treasurer | 20 | | with an electronic report listing those College
Savings Pool | 21 | | account owners who also participate in the Illinois Prepaid | 22 | | Tuition Program, administered by the Commission. | 23 | | The Treasurer shall
work with the Illinois Student | 24 | | Assistance Commission to coordinate the
marketing of the | 25 | | College Savings Pool and the Illinois Prepaid Tuition
Program | 26 | | when considered beneficial by the Treasurer and the Director |
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| 1 | | of the
Illinois Student Assistance
Commission. | 2 | | (l) Prohibition; exemption. No interest in the program, or | 3 | | any portion thereof, may be used as security for a
loan. Moneys | 4 | | held in an account invested in the College Savings Pool shall | 5 | | be exempt from all claims of the creditors of the account | 6 | | owner, donor, or designated beneficiary of that account, | 7 | | except for the non-exempt College Savings Pool transfers to or | 8 | | from the account as defined under subsection (j) of Section | 9 | | 12-1001 of the Code of Civil Procedure.
| 10 | | (m) Taxation. The assets of the College Savings Pool and | 11 | | its income and operation shall
be exempt from all taxation by | 12 | | the State of Illinois and any of its
subdivisions. The accrued | 13 | | earnings on investments in the Pool once disbursed
on behalf | 14 | | of a designated beneficiary shall be similarly exempt from all
| 15 | | taxation by the State of Illinois and its subdivisions, so | 16 | | long as they are
used for qualified expenses. Contributions to | 17 | | a College Savings Pool account
during the taxable year may be | 18 | | deducted from adjusted gross income as provided
in Section 203 | 19 | | of the Illinois Income Tax Act. The provisions of this
| 20 | | paragraph are exempt from Section 250 of the Illinois Income | 21 | | Tax Act.
| 22 | | (n) Rules. The Treasurer shall adopt rules he or she | 23 | | considers necessary for the
efficient administration of the | 24 | | College Savings Pool. The rules shall provide
whatever | 25 | | additional parameters and restrictions are necessary to ensure | 26 | | that
the College Savings Pool meets all the requirements for a |
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| 1 | | qualified
tuition program under Section 529 of the Internal | 2 | | Revenue Code.
| 3 | | The
rules shall require the maintenance of records that | 4 | | enable the Treasurer's
office to produce a report for each | 5 | | account in the Pool at least annually that
documents the | 6 | | account balance and investment earnings. | 7 | | Notice of any proposed
amendments to the rules and | 8 | | regulations shall be provided to all account owners
prior to | 9 | | adoption.
| 10 | | (o) Bond. The State Treasurer shall give bond
with at | 11 | | least one surety, payable to and for the benefit of the
account | 12 | | owners in the College Savings Pool, in the penal sum of | 13 | | $10,000,000,
conditioned upon the faithful discharge of his or | 14 | | her duties in relation to
the College Savings Pool.
| 15 | | (p) The changes made to subsections (c) and (e) of this | 16 | | Section by this amendatory Act of the 101st General Assembly | 17 | | are intended to be a restatement and clarification of existing | 18 | | law. | 19 | | (Source: P.A. 100-161, eff. 8-18-17; 100-863, eff. 8-14-18; | 20 | | 100-905, eff. 8-17-18; 101-26, eff. 6-21-19; 101-81, eff. | 21 | | 7-12-19.)
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