Bill Text: IL HB4625 | 2019-2020 | 101st General Assembly | Engrossed

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Bill Title: Amends the State Treasurer Act. Modifies provisions concerning the College Savings Pool. Provides that the State Treasurer, in administering the College Savings Pool, may, among other actions, perform any other action he or she deems necessary to administer the Pool. Provides that the State Treasurer may delegate duties related to the College Savings Pool to one or more contractors. Provides that any fees, costs, and expenses related to the College Savings Pool shall be paid from the assets of the College Savings Pool. Provides further requirements concerning fees of the College Savings Pool. Modifies provisions concerning investment restrictions, distributions, and contributions of the College Savings Pool. Removes provisions requiring the maintenance of specified records. Modifies defined terms. Makes conforming and other changes. Effective immediately.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2020-06-23 - Rule 19(b) / Re-referred to Rules Committee [HB4625 Detail]

Download: Illinois-2019-HB4625-Engrossed.html

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AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Treasurer Act is amended by changing
Section 16.5 as follows:
(15 ILCS 505/16.5)
Sec. 16.5. College Savings Pool.
(a) Definitions. As used in this Section:
"Account owner" means any person or entity who has opened
an account or to whom ownership of an account has been
transferred, as allowed by the Internal Revenue Code, and who
has authority to withdraw funds, direct withdrawal of funds,
change the designated beneficiary, or otherwise exercise
control over an account in the College Savings Pool.
"Donor" means any person or entity who makes contributions
to an account in the College Savings Pool.
"Designated beneficiary" means any individual designated
as the beneficiary of an account in the College Savings Pool by
an account owner. A designated beneficiary must have a valid
social security number or taxpayer identification number. In
the case of an account established as part of a scholarship
program permitted under Section 529 of the Internal Revenue
Code, the designated beneficiary is any individual receiving

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benefits accumulated in the account as a scholarship.
"Eligible educational institution" means public and
private colleges, junior colleges, graduate schools, and
certain vocational institutions that are described in Section
1001 of the Higher Education Resource and Student Assistance
Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
and that are eligible to participate in Department of Education
student aid programs.
"Member of the family" has the same meaning ascribed to
that term under Section 529 of the Internal Revenue Code.
"Nonqualified withdrawal" means a distribution from an
account other than a distribution that (i) is used for the
qualified expenses of the designated beneficiary; (ii) results
from the beneficiary's death or disability; (iii) is a rollover
to another account in the College Savings Pool; or (iv) is a
rollover to an ABLE account, as defined in Section 16.6 of this
Act, or any distribution that, within 60 days after such
distribution, is transferred to an ABLE account of the
designated beneficiary or a member of the family of the
designated beneficiary to the extent that the distribution,
when added to all other contributions made to the ABLE account
for the taxable year, does not exceed the limitation under
Section 529A(b) of the Internal Revenue Code.
"Program manager" means any financial institution or
entity lawfully doing business in the State of Illinois
selected by the State Treasurer to oversee the recordkeeping,

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custody, customer service, investment management, and
marketing for one or more of the programs in the College
Savings Pool.
"Qualified expenses" means: (i) tuition, fees, and the
costs of books, supplies, and equipment required for enrollment
or attendance at an eligible educational institution; (ii)
expenses for special needs services, in the case of a special
needs beneficiary, which are incurred in connection with such
enrollment or attendance; (iii) certain expenses, to the extent
they qualify as qualified higher education expenses under
Section 529 of the Internal Revenue Code, for the purchase of
computer or peripheral equipment, as defined in Section 168 of
the federal Internal Revenue Code (26 U.S.C. 168), computer
software, as defined in Section 197 of the federal Internal
Revenue Code (26 U.S.C. 197), or Internet access and related
services, if such equipment, software, or services are to be
used primarily by the beneficiary during any of the years the
beneficiary is enrolled at an eligible educational
institution, except that, such expenses shall not include
expenses for computer software designed for sports, games, or
hobbies, unless the software is predominantly educational in
nature; and (iv) room and board expenses incurred while
attending an eligible educational institution at least
half-time; (v) expenses for fees, books, supplies, and
equipment required for the participation of a designated
beneficiary in an apprenticeship program registered and

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certified with the Secretary of Labor under the National
Apprenticeship Act (29 U.S.C. 50); and (vi) amounts paid as
principal or interest on any qualified education loan of the
designated beneficiary or a sibling of the designated
beneficiary, as allowed under Section 529 of the Internal
Revenue Code. . "Eligible educational institutions", as used in
this Section, means public and private colleges, junior
colleges, graduate schools, and certain vocational
institutions that are described in Section 1001 of the Higher
Education Resource and Student Assistance Chapter of Title 20
of the United States Code (20 U.S.C. 1001) and that are
eligible to participate in Department of Education student aid
programs. A student shall be considered to be enrolled at least
half-time if the student is enrolled for at least half the
full-time academic workload for the course of study the student
is pursuing as determined under the standards of the
institution at which the student is enrolled.
(b) Establishment of the Pool. The State Treasurer may
establish and administer the College Savings Pool as a
qualified tuition program under Section 529 of the Internal
Revenue Code. The Pool may consist of one or more college
savings programs. The State Treasurer, in administering the
College Savings Pool, may: (1) receive, hold, and invest moneys
paid into the Pool; and (2) perform any other action he or she
deems necessary to administer the Pool, including any such
other actions as are necessary to ensure that the Pool operates

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as a qualified tuition program in accordance with Section 529
of the Internal Revenue Code.
(c) Administration of the College Savings Pool. The State
Treasurer may delegate duties related to the College Savings
Pool to engage one or more contractors financial institutions
to handle the overall administration, investment management,
recordkeeping, and marketing of the programs in the College
Savings Pool. The contributions deposited in the Pool, and any
earnings thereon, shall not constitute property of the State or
be commingled with State funds and the State shall have no
claim to or against, or interest in, such funds; provided that
the fees collected by the State Treasurer in accordance with
this Act, scholarship programs administered by the State
Treasurer, and seed funds deposited by the State Treasurer
under Section 16.8 of the Act are State funds State Treasurer
may collect fees in accordance with this Act.
(c-5) College Savings Pool Account Summaries. The State
Treasurer shall provide a separate accounting for each
designated beneficiary. The separate accounting shall be
provided to the account owner of the account for the designated
beneficiary at least annually and shall show the account
balance, the investment in the account, the investment
earnings, and the distributions from the account.
(d) Availability of the College Savings Pool. The State
Treasurer may permit persons, including trustees of trusts and
custodians under a Uniform Transfers to Minors Act or Uniform

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Gifts to Minors Act account, and certain legal entities to be
account owners, including as part of a scholarship program,
provided that: (1) an individual, trustee or custodian must
have a valid social security number or taxpayer identification
number, be at least 18 years of age, and have a valid United
States street address; and (2) a legal entity must have a valid
taxpayer identification number and a valid United States street
address. In-state Both in-state and out-of-state persons,
trustees, custodians, and legal entities may be account owners
and donors, and both in-state and out-of-state individuals may
be designated beneficiaries in the College Savings Pool.
(e) Fees. Any fees, costs, and expenses, including
investment fees and expenses and payments to third parties,
related to the College Savings Pool, shall be paid from the
assets of the College Savings Pool. The State Treasurer shall
establish fees to be imposed on accounts to cover such fees,
costs, and expenses, to the extent not paid directly out of the
investments of the College Savings Pool, and to maintain an
adequate reserve fund in line with industry standards for
government operated funds the costs of administration,
recordkeeping, and investment management. The Treasurer must
use his or her best efforts to keep these fees as low as
possible and consistent with administration of high quality
competitive college savings programs. Administrative fees,
costs, and expenses, including investment fees and expenses,
shall be paid from the assets of the College Savings Pool.

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(f) Investments in the State. To enhance the safety and
liquidity of the College Savings Pool, to ensure the
diversification of the investment portfolio of the College
Savings Pool, and in an effort to keep investment dollars in
the State of Illinois, the State Treasurer may make a
percentage of each account available for investment in
participating financial institutions doing business in the
State.
(g) Investment policy. The Treasurer shall develop,
publish, and implement an investment policy covering the
investment of the moneys in each of the programs in the College
Savings Pool. The policy shall be published each year as part
of the audit of the College Savings Pool by the Auditor
General, which shall be distributed to all account owners in
such program. The Treasurer shall notify all account owners in
such program in writing, and the Treasurer shall publish in a
newspaper of general circulation in both Chicago and
Springfield, any changes to the previously published
investment policy at least 30 calendar days before implementing
the policy. Any investment policy adopted by the Treasurer
shall be reviewed and updated if necessary within 90 days
following the date that the State Treasurer takes office.
(h) Investment restrictions. An account owner may,
directly or indirectly, direct the investment of his or her
account of any contributions to the College Savings Pool (or
any earnings thereon) only as provided in Section 529(b)(4) of

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the Internal Revenue Code. Donors and designated
beneficiaries, in those capacities, may not, directly or
indirectly, direct the investment of an account any
contributions to the Pool (or any earnings thereon).
(i) Distributions. Distributions from an account in the
College Savings Pool may be used for the designated
beneficiary's qualified expenses, and if not used in that
manner, may be considered a nonqualified withdrawal. Funds
contained in a College Savings Pool account may be rolled over
into an eligible ABLE account, as defined in Section 16.6 of
this Act, or another qualified tuition program, to the extent
permitted by Section 529 of the Internal Revenue Code.
Distributions made from the College Savings Pool may be
made directly to the eligible educational institution,
directly to a vendor, in the form of a check payable to both
the designated beneficiary and the institution or vendor,
directly to the designated beneficiary or account owner, or in
any other manner that is permissible under Section 529 of the
Internal Revenue Code.
(j) Contributions. Contributions to the College Savings
Pool shall be as follows:
(1) Contributions to an account in the College Savings
Pool may be made only in cash.
(2) The Treasurer shall limit the contributions that
may be made to the College Savings Pool on behalf of a
designated beneficiary, as required under Section 529 of

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the Internal Revenue Code, to prevent contributions for the
benefit of a designated beneficiary in excess of those
necessary to provide for the qualified expenses of the
designated beneficiary. The Pool shall not permit any
additional contributions to an account as soon as the sum
of (i) the aggregate balance in all accounts in the Pool
for the designated beneficiary and (ii) the aggregate value
of credits in the Illinois Prepaid Tuition Program for the
designated beneficiary reaches the specified balance limit
established from time to time by the Treasurer. in the Pool
reach a specified account balance limit applicable to all
designated beneficiaries.
(3) The contributions made on behalf of a designated
beneficiary who is also a beneficiary under the Illinois
Prepaid Tuition Program shall be further restricted to
ensure that the contributions in both programs combined do
not exceed the limit established for the College Savings
Pool.
(k) Illinois Student Assistance Commission. The Treasurer
shall provide the Illinois Student Assistance Commission each
year at a time designated by the Commission, an electronic
report of all account owner accounts in the Treasurer's College
Savings Pool, listing total contributions and disbursements
from each individual account during the previous calendar year.
As soon thereafter as is possible following receipt of the
Treasurer's report, the Illinois Student Assistance Commission

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shall, in turn, provide the Treasurer with an electronic report
listing those College Savings Pool account owners who also
participate in the Illinois Prepaid Tuition Program,
administered by the Commission.
The Treasurer shall work with the Illinois Student
Assistance Commission to coordinate the marketing of the
College Savings Pool and the Illinois Prepaid Tuition Program
when considered beneficial by the Treasurer and the Director of
the Illinois Student Assistance Commission.
(l) Prohibition; exemption. No interest in the program, or
any portion thereof, may be used as security for a loan. Moneys
held in an account invested in the College Savings Pool shall
be exempt from all claims of the creditors of the account
owner, donor, or designated beneficiary of that account, except
for the non-exempt College Savings Pool transfers to or from
the account as defined under subsection (j) of Section 12-1001
of the Code of Civil Procedure.
(m) Taxation. The assets of the College Savings Pool and
its income and operation shall be exempt from all taxation by
the State of Illinois and any of its subdivisions. The accrued
earnings on investments in the Pool once disbursed on behalf of
a designated beneficiary shall be similarly exempt from all
taxation by the State of Illinois and its subdivisions, so long
as they are used for qualified expenses. Contributions to a
College Savings Pool account during the taxable year may be
deducted from adjusted gross income as provided in Section 203

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of the Illinois Income Tax Act. The provisions of this
paragraph are exempt from Section 250 of the Illinois Income
Tax Act.
(n) Rules. The Treasurer shall adopt rules he or she
considers necessary for the efficient administration of the
College Savings Pool. The rules shall provide whatever
additional parameters and restrictions are necessary to ensure
that the College Savings Pool meets all the requirements for a
qualified tuition program under Section 529 of the Internal
Revenue Code.
The rules shall require the maintenance of records that
enable the Treasurer's office to produce a report for each
account in the Pool at least annually that documents the
account balance and investment earnings.
Notice of any proposed amendments to the rules and
regulations shall be provided to all account owners prior to
adoption.
(o) Bond. The State Treasurer shall give bond with at least
one surety, payable to and for the benefit of the account
owners in the College Savings Pool, in the penal sum of
$10,000,000, conditioned upon the faithful discharge of his or
her duties in relation to the College Savings Pool.
(p) The changes made to subsections (c) and (e) of this
Section by Public Act 101-26 this amendatory Act of the 101st
General Assembly are intended to be a restatement and
clarification of existing law.

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(Source: P.A. 100-161, eff. 8-18-17; 100-863, eff. 8-14-18;
100-905, eff. 8-17-18; 101-26, eff. 6-21-19; 101-81, eff.
7-12-19.)
Section 99. Effective date. This Act takes effect upon
becoming law.