Bill Amendment: IL HB4754 | 2017-2018 | 100th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: ABLE ACCT PROG-ASSET PROTECT

Status: 2018-11-28 - Total Veto Stands - No Positive Action Taken [HB4754 Detail]

Download: Illinois-2017-HB4754-House_Amendment_001.html

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Rep. Kelly M. Burke

Filed: 3/7/2018

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AMENDMENT TO HOUSE BILL 4754
AMENDMENT NO. ______. Amend House Bill 4754 by replacing
everything after the enacting clause with the following:
"Section 5. The State Treasurer Act is amended by changing
Section 16.6 as follows:
(15 ILCS 505/16.6)
Sec. 16.6. ABLE account program.
(a) As used in this Section:
"ABLE account" or "account" means an account established
for the purpose of financing certain qualified expenses of
eligible individuals as specifically provided for in this
Section and authorized by Section 529A of the Internal Revenue
Code.
"ABLE account plan" or "plan" means the savings account
plan provided for in this Section.
"Account administrator" means the person selected by the

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State Treasurer to administer the daily operations of the ABLE
account plan and provide marketing, recordkeeping, investment
management, and other services for the plan.
"Aggregate account balance" means the amount in an account
on a particular date or the fair market value of an account on
a particular date.
"Beneficiary" means the ABLE account owner.
"Board" means the Illinois State Board of Investment.
"Contracting state" means a state without a qualified ABLE
program which has entered into a contract with Illinois to
provide residents of the contracting state access to a
qualified ABLE program.
"Designated representative" means a person who is
authorized to act on behalf of an account owner. An account
owner is authorized to act on his or her own behalf unless the
account owner is a minor or the account owner has been
adjudicated to have a disability so that a guardian has been
appointed. A designated representative acts in a fiduciary
capacity to the account owner. The State Treasurer shall
recognize a person as a designated representative without
appointment by a court in the following order of priority:
(1) The account owner's plenary guardian of the estate,
or the account owner's limited guardian of financial or
contractual matters. Any guardian acting in this capacity
shall not be required to seek court approval for any ABLE
qualified distributions.

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(2) The agent named by the account owner in a property
power of attorney recognized as a statutory short form
power of attorney for property.
(3) Such individual or entity that the account owner so
designates in writing, in a manner to be established by the
State Treasurer.
(4) Such other individual or entity designated by the
State Treasurer pursuant to its rules.
"Disability certification" has the meaning given to that
term under Section 529A of the Internal Revenue Code.
"Eligible individual" has the meaning given to that term
under Section 529A of the Internal Revenue Code.
"Participation agreement" means an agreement to
participate in the ABLE account plan between an account owner
and the State, through its agencies and the State Treasurer.
"Qualified disability expenses" has the meaning given to
that term under Section 529A of the Internal Revenue Code.
"Qualified withdrawal" or "qualified distribution" means a
withdrawal from an ABLE account to pay the qualified disability
expenses of the beneficiary of the account.
(b) The "Achieving a Better Life Experience" or "ABLE"
account program is hereby created and shall be administered by
the State Treasurer. The purpose of the ABLE plan is to
encourage and assist individuals and families in saving private
funds for the purpose of supporting individuals with
disabilities to maintain health, independence, and quality of

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life, and to provide secure funding for disability-related
expenses on behalf of designated beneficiaries with
disabilities that will supplement, but not supplant, benefits
provided through private insurance, federal and State medical
and disability insurance, the beneficiary's employment, and
other sources. Under the plan, a person may make contributions
to an ABLE account to meet the qualified disability expenses of
the designated beneficiary of the account. The plan must be
operated as an accounts-type plan that permits persons to save
for qualified disability expenses incurred by or on behalf of
an eligible individual.
The State Treasurer shall promote awareness of the
availability and advantages of the ABLE account plan as a way
to assist individuals and families in saving private funds for
the purpose of supporting individuals with disabilities. The
cost of these promotional efforts shall not be funded with fees
imposed on participants by the State Treasurer.
The State Treasurer shall not accept contributions for ABLE
accounts under this Section until the Internal Revenue Service
has issued its final regulations or interim guidance concerning
ABLE accounts.
A separate account must be maintained for each beneficiary
for whom contributions are made, and no more than one account
shall be established per beneficiary. If an ABLE account is
established for a designated beneficiary, no account
subsequently established for such beneficiary shall be treated

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as an ABLE account. The preceding sentence shall not apply in
the case of an ABLE account established for purposes of a
rollover as permitted under Section 529A of the Internal
Revenue Code.
An ABLE account may be established under this Section for a
designated beneficiary who is a resident of Illinois, a
resident of a contracting state, or a resident of any other
state.
Prior to the establishment of an ABLE account, an account
owner must provide documentation to the State Treasurer that
the account beneficiary is an eligible individual.
Annual contributions to an ABLE account on behalf of a
beneficiary are subject to the requirements of subsection (b)
of Section 529A of the Internal Revenue Code. No person may
make a contribution to an ABLE account if such a contribution
would result in the aggregate account balance of an ABLE
account exceeding the account balance limit authorized under
Section 529A of the Internal Revenue Code. The Treasurer shall
review the contribution limit at least annually.
The State Treasurer shall administer the plan, including
accepting and processing applications, maintaining account
records, making payments, and undertaking any other necessary
tasks to administer the plan, including the appointment of an
account administrator. The State Treasurer may contract with
one or more third parties to carry out some or all of these
administrative duties, including, but not limited to,

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providing investment management services, incentives, and
marketing the plan.
In designing and establishing the plan's requirements and
in negotiating or entering into contracts with third parties
under this Section, the State Treasurer shall consult with the
Board. The State Treasurer shall establish fees to be imposed
on participants to recover the costs of administration,
recordkeeping, and investment management. The State Treasurer
must use his or her best efforts to keep these fees as low as
possible, consistent with efficient administration.
The Illinois ABLE Accounts Administrative Fund is created
as a nonappropriated trust fund in the State treasury. The
State Treasurer shall use moneys in the Administrative Fund to
pay for administrative expenses he or she incurs in the
performance of his or her duties under this Section. The State
Treasurer shall use moneys in the Administrative Fund to cover
administrative expenses incurred under this Section. The
Administrative Fund may receive any grants or other moneys
designated for administrative purposes from the State, or any
unit of federal, state, or local government, or any other
person, firm, partnership, or corporation. Any interest
earnings that are attributable to moneys in the Administrative
Fund must be deposited into the Administrative Fund. Any fees
established by the State Treasurer to recover the costs of
administration, recordkeeping, and investment management shall
be deposited into the Administrative Fund.

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Subject to appropriation, the State Treasurer may pay
administrative costs associated with the creation and
management of the plan until sufficient assets are available in
the Administrative Fund for that purpose.
Applications for accounts, account owner data, account
data, and data on beneficiaries of accounts are confidential
and exempt from disclosure under the Freedom of Information
Act.
(c) The State Treasurer may invest the moneys in ABLE
accounts in the same manner and in the same types of
investments provided for the investment of moneys by the Board.
To enhance the safety and liquidity of ABLE accounts, to ensure
the diversification of the investment portfolio of accounts,
and in an effort to keep investment dollars in the State, the
State Treasurer may make a percentage of each account available
for investment in participating financial institutions doing
business in the State, except that the accounts may be invested
without limit in investment options from open-ended investment
companies registered under Section 80a of the federal
Investment Company Act of 1940. The State Treasurer may
contract with one or more third parties for investment
management, recordkeeping, or other services in connection
with investing the accounts.
The account administrator shall annually prepare and adopt
a written statement of investment policy that includes a risk
management and oversight program. The risk management and

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oversight program shall be designed to ensure that an effective
risk management system is in place to monitor the risk levels
of the ABLE plan, to ensure that the risks taken are prudent
and properly managed, to provide an integrated process for
overall risk management, and to assess investment returns as
well as risk to determine if the risks taken are adequately
compensated compared to applicable performance benchmarks and
standards.
The State Treasurer may enter into agreements with other
states to either allow Illinois residents to participate in a
plan operated by another state or to allow residents of other
states to participate in the Illinois ABLE plan.
(d) The State Treasurer shall ensure that the plan meets
the requirements for an ABLE account under Section 529A of the
Internal Revenue Code. The State Treasurer may request a
private letter ruling or rulings from the Internal Revenue
Service and must take any necessary steps to ensure that the
plan qualifies under relevant provisions of federal law.
Notwithstanding the foregoing, any determination by the
Secretary of the Treasury of the United States that an account
was utilized to make non-qualified distributions shall not
result in an ABLE account being disregarded as a resource.
A person may make contributions to an ABLE account on
behalf of a beneficiary. Contributions to an account made by
persons other than the account owner become the property of the
account owner. Contributions to an account shall be considered

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as a transfer of assets for fair market value. A person does
not acquire an interest in an ABLE account by making
contributions to an account. A contribution to any account for
a beneficiary must be rejected if the contribution would cause
either the aggregate or annual account balance of the account
to exceed the limits imposed by Section 529A of the Internal
Revenue Code.
Any change in account owner must be done in a manner
consistent with Section 529A of the Internal Revenue Code.
Notice of any proposed amendments to the rules and
regulations shall be provided to all owners or their designated
representatives prior to adoption. Amendments to rules and
regulations shall apply only to contributions made after the
adoption of the amendment. Amendments to this Section
automatically amend the participation agreement. Any
amendments to the operating procedures and policies of the plan
shall automatically amend the participation agreement after
adoption by the State Treasurer.
All assets of the plan, including any contributions to
accounts, are held in trust for the exclusive benefit of the
account owner and shall be considered spendthrift accounts
exempt from all of the owner's creditors. The plan shall
provide separate accounting for each designated beneficiary
sufficient to satisfy the requirements of paragraph (3) of
subsection (b) of Section 529A of the Internal Revenue Code.
Assets must be held in either a state trust fund outside the

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State treasury, to be known as the Illinois ABLE plan trust
fund, or in accounts with a third-party provider selected
pursuant to this Section. Amounts contributed to ABLE accounts
shall not be commingled with State funds and the State shall
have no claim to or against, or interest in, such funds.
Plan assets are not subject to claims by creditors of the
State and are not subject to appropriation by the State.
Payments from the Illinois ABLE account plan shall be made
under this Section.
The assets of ABLE accounts and their income may not be
used as security for a loan.
The assets of ABLE accounts and their income and operation
shall be exempt from all taxation by the State of Illinois and
any of its subdivisions to the extent exempt from federal
income taxation. The accrued earnings on investments in an ABLE
account once disbursed on behalf of a designated beneficiary
shall be similarly exempt from all taxation by the State of
Illinois and its subdivisions to the extent exempt from federal
income taxation, so long as they are used for qualified
expenses.
Notwithstanding any other provision of law that requires
consideration of one or more financial circumstances of an
individual, for the purpose of determining eligibility to
receive, or the amount of, any assistance or benefit authorized
by such provision to be provided to or for the benefit of such
individual, any amount, including earnings thereon, in the ABLE

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account of such individual, any contributions to the ABLE
account of the individual, and any distribution for qualified
disability expenses shall be disregarded for such purpose with
respect to any period during which such individual maintains,
makes contributions to, or receives distributions from such
ABLE account.
(e) The account owner or the designated representative of
the account owner may request that a qualified distribution be
made for the benefit of the account owner. Qualified
distributions shall be made for qualified disability expenses
allowed pursuant to Section 529A of the Internal Revenue Code.
Qualified distributions must be withdrawn proportionally from
contributions and earnings in an account owner's account on the
date of distribution as provided in Section 529A of the
Internal Revenue Code. Unless prohibited by federal law, upon
the death of a designated beneficiary, proceeds from an account
may be transferred to the estate of a designated beneficiary,
or to an account for another eligible individual specified by
the designated beneficiary or the estate of the designated
beneficiary. An agency or instrumentality of the State may not
seek payment under subsection (f) of Section 529A of the
federal Internal Revenue Code from the account or its proceeds
for benefits provided to a designated beneficiary. Upon the
death of a beneficiary, the amount remaining in the
beneficiary's account must be distributed pursuant to
subsection (f) of Section 529A of the Internal Revenue Code.

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(f) The State Treasurer may adopt rules to carry out the
purposes of this Section. The State Treasurer shall further
have the power to issue peremptory rules necessary to ensure
that ABLE accounts meet all of the requirements for a qualified
state ABLE program under Section 529A of the Internal Revenue
Code and any regulations issued by the Internal Revenue
Service.
(Source: P.A. 99-145, eff. 1-1-16; 99-563, eff. 7-15-16.)
Section 10. The Trusts and Trustees Act is amended by
changing Section 15.1 as follows:
(760 ILCS 5/15.1) (from Ch. 17, par. 1685.1)
Sec. 15.1. Trust for a beneficiary with a disability.
(a) A discretionary trust for the benefit of an individual
who has a disability that substantially impairs the
individual's ability to provide for his or her own care or
custody and constitutes a substantial disability shall not be
liable to pay or reimburse the State or any public agency for
financial aid or services to the individual except to the
extent the trust was created by the individual or trust
property has been distributed directly to or is otherwise under
the control of the individual, provided that such exception
shall not apply to a trust created with the property of the
individual with a disability or property within his or her
control if the trust complies with Medicaid reimbursement

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requirements of federal law. Notwithstanding any other
provisions to the contrary, a trust created with the property
of the individual with a disability or property within his or
her control shall be liable, after reimbursement of Medicaid
expenditures, to the State for reimbursement of any other
service charges outstanding at the death of the individual with
a disability. Property, goods and services purchased or owned
by a trust for and used or consumed by a beneficiary with a
disability shall not be considered trust property distributed
to or under the control of the beneficiary. A discretionary
trust is one in which the trustee has discretionary power to
determine distributions to be made under the trust.
(b) The court or a person with a disability may irrevocably
assign resources of that person to either or both of: (i) an
ABLE account, as defined under Section 16.6 of the State
Treasurer Act; or (ii) a discretionary trust that complies with
the Medicaid reimbursement requirements of federal law. As used
in this subsection, "resources" includes, but is not limited
to, any interest in real or personal property, judgment,
settlement, annuity, maintenance, minor child support, and
support for non-minor children. Assignment is not authorized if
otherwise prohibited by law. A court may reserve the right to
determine the amount, duration, or enforcement of the
irrevocable assignment.
(Source: P.A. 99-143, eff. 7-27-15.)

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Section 99. Effective date. This Act takes effect upon
becoming law.".