Bill Text: IL HB4751 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the State Treasurer Act. Modifies and reorganizes the provisions of a Section concerning the College Savings Pool. Provides that the State Treasurer may establish and administer a College Savings Pool as a qualified tuition program under the Internal Revenue Code, and that the Pool may consist of one or more college savings programs. Provides that the State Treasurer, in administering the College Savings Pool, may receive, hold, and invest moneys paid into the Pool and perform such other actions as are necessary to ensure that the Pool operates as a qualified tuition program under the Internal Revenue Code. Provides provisions concerning administration, availability, fees, and investment restrictions of the Pool. Modifies the way in which investments, distributions, contributions, and bonds are made regarding the Pool. Defines terms. Makes conforming, technical, and other changes. Effective immediately.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Passed) 2018-08-17 - Public Act . . . . . . . . . 100-0905 [HB4751 Detail]

Download: Illinois-2017-HB4751-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB4751 Introduced , by Rep. Emanuel Chris Welch SYNOPSIS AS INTRODUCED:
15 ILCS 505/16.5
Amends the State Treasurer Act. Modifies and reorganizes the provisions of a Section concerning the College Savings Pool. Provides that the State Treasurer may establish and administer a College Savings Pool as a qualified tuition program under the Internal Revenue Code, and that the Pool may consist of one or more college savings programs. Provides that the State Treasurer, in administering the College Savings Pool, may receive, hold, and invest moneys paid into the Pool and perform such other actions as are necessary to ensure that the Pool operates as a qualified tuition program under the Internal Revenue Code. Provides provisions concerning administration, availability, fees, and investment restrictions of the Pool. Modifies the way in which investments, distributions, contributions, and bonds are made regarding the Pool. Defines terms. Makes conforming, technical, and other changes. Effective immediately.
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A BILL FOR
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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.
"Nonqualified withdrawal" means a distribution from an
account that is not used for the qualified expenses of the
designated beneficiary.
"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,
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 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

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educational in nature; and (iv) room and board expenses
incurred while attending an eligible educational institution
at least half-time. "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 481 of the Higher
Education Act of 1965 (20 U.S.C. 1088) 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 work load 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 a 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 to
supplement and enhance the investment opportunities otherwise
available to persons seeking to finance the costs of higher
education. The State Treasurer, in administering the College
Savings Pool, may receive, hold, and invest moneys paid into
the Pool and perform such other actions as are necessary to
ensure that the Pool operates as a qualified tuition program in
accordance with Section 529 of the Internal Revenue Code pool
by a participant and may serve as the fiscal agent of that
participant for the purpose of holding and investing those

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moneys.
(c) Administration of the College Savings Pool. The State
Treasurer may engage one or more 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.
"Participant", as used in this Section, means any person
who has authority to withdraw funds, change the designated
beneficiary, or otherwise exercise control over an account.
"Donor", as used in this Section, means any person who makes
investments in the pool. "Designated beneficiary", as used in
this Section, means any person on whose behalf an account is
established in the College Savings Pool by a participant. Both
in-state and out-of-state persons may be participants, donors,
and designated beneficiaries in the College Savings Pool. The
College Savings Pool must be available to any individual with a
valid social security number or taxpayer identification number
for the benefit of any individual with a valid social security
number or taxpayer identification number, unless a contract in
effect on August 1, 2011 (the effective date of Public Act
97-233) does not allow for taxpayer identification numbers, in
which case taxpayer identification numbers must be allowed upon
the expiration of the contract.

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New accounts in the College Savings Pool may be processed
through participating financial institutions. "Participating
financial institution", as used in this Section, means any
financial institution insured by the Federal Deposit Insurance
Corporation and lawfully doing business in the State of
Illinois and any credit union approved by the State Treasurer
and lawfully doing business in the State of Illinois that
agrees to process new accounts in the College Savings Pool.
Participating financial institutions may charge a processing
fee to participants to open an account in the pool that shall
not exceed $30 until the year 2001. Beginning in 2001 and every
year thereafter, the maximum fee limit shall be adjusted by the
Treasurer based on the Consumer Price Index for the North
Central Region as published by the United States Department of
Labor, Bureau of Labor Statistics for the immediately preceding
calendar year. Every contribution received by a financial
institution for investment in the College Savings Pool shall be
transferred from the financial institution to a location
selected by the State Treasurer within one business day
following the day that the funds must be made available in
accordance with federal law. All communications from the State
Treasurer to participants and donors shall reference the
participating financial institution at which the account was
processed.
The Treasurer may invest the moneys in the College Savings
Pool in the same manner and in the same types of investments

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provided for the investment of moneys by the Illinois State
Board of Investment.
(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
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. Both in-State and out-of-State persons 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. The State Treasurer shall establish fees to be
imposed on accounts to recover 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.
(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 pool, and in an effort to keep investment dollars

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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. The State Treasurer may deposit with the participating
financial institution at which the account was processed the
following percentage of each account at a prevailing rate
offered by the institution, provided that the deposit is
federally insured or fully collateralized and the institution
accepts the deposit: 10% of the total amount of each account
for which the current age of the beneficiary is less than 7
years of age, 20% of the total amount of each account for which
the beneficiary is at least 7 years of age and less than 12
years of age, and 50% of the total amount of each account for
which the current age of the beneficiary is at least 12 years
of age.
(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 participants. The Treasurer shall notify all
account owners in such program participants 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

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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 any
contributions to the College Savings Pool (or any earnings
thereon) only as provided in Section 529(b)(4) of the Internal
Revenue Code. Donors and designated beneficiaries, in those
capacities, may not, directly or indirectly, direct the
investment of any contributions to the Pool (or any earnings
thereon).
(i) Distributions. Distributions Participants shall be
required to use moneys distributed from an account in the
College Savings Pool may be used for the designated
beneficiary's qualified expenses at eligible educational
institutions. To the extent a nonqualified withdrawal is made
from an account, the earnings portion of such distribution may
be treated by the Internal Revenue Service as income subject to
income tax and a 10% federal penalty tax. "Qualified expenses",
as used in this Section, means the following: (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 for the purchase of computer or peripheral equipment,

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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) certain room and
board expenses incurred while attending an eligible
educational institution at least half-time. "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 481 of the Higher Education Act of 1965
(20 U.S.C. 1088) 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 work load
for the course of study the student is pursuing as determined
under the standards of the institution at which the student is
enrolled.
Distributions made from the College Savings Pool may pool
for qualified expenses shall be made directly to the eligible
educational institution, directly to a vendor, in the form of a

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check payable to both the designated beneficiary and the
institution or vendor, or directly to the designated
beneficiary or account owner, or in any other a manner that is
permissible under Section 529 of the Internal Revenue Code. Any
moneys that are distributed in any other manner or that are
used for expenses other than qualified expenses at an eligible
educational institution shall be subject to a penalty of 10% of
the earnings unless the beneficiary dies, becomes a person with
a disability, or receives a scholarship that equals or exceeds
the distribution. Penalties shall be withheld at the time the
distribution is made.
(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
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 based on the limitations
established by the Internal Revenue Service. The Pool shall
not permit any additional contributions to an account as
soon as the aggregate accounts for the designated
beneficiary in the Pool reach a specified account balance

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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 participant 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 shall, in turn, provide the
Treasurer with an electronic report listing those College
Savings Pool account owners participants who also participate
in the State's prepaid tuition program, administered by the
Commission. The Commission shall be responsible for filing any
combined tax reports regarding State qualified savings
programs required by the United States Internal Revenue
Service.
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

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when considered beneficial by the Treasurer and the Director of
the Illinois Student Assistance Commission. The Treasurer's
office shall not publicize or otherwise market the College
Savings Pool or accept any moneys into the College Savings Pool
prior to March 1, 2000. The Treasurer shall provide a separate
accounting for each designated beneficiary to each account
owner participant, the Illinois Student Assistance Commission,
and the participating financial institution at which the
account was processed.
(l) Prohibition; exemption. No interest in the program, or
any portion thereof, may be used pledged as security for a
loan. Moneys held in an account invested in the Illinois
College Savings Pool shall be exempt from all claims of the
creditors of the account owner participant, 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 (735 ILCS 5/12-1001(j)).
(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

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deducted from adjusted gross income as provided in Section 203
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 of the requirements for
a qualified state tuition program under Section 529 of the
Internal Revenue Code (26 U.S.C. 529).
The rules shall provide for the administration expenses of
the Pool pool to be paid from its earnings and for the
investment earnings in excess of the expenses and all moneys
collected as penalties to be credited at least or paid monthly
to the account owners several participants in the Pool pool in
a manner which equitably reflects the differing amounts of
their respective investments in the Pool pool and the differing
periods of time for which those amounts were in the custody of
the Pool pool.
The Also, the rules shall require the maintenance of
records that enable the Treasurer's office to produce a report
for each account in the Pool 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

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participants prior to adoption. Amendments to rules and
regulations shall apply only to contributions made after the
adoption of the amendment.
(o) Bond. The Upon creating the College Savings Pool, the
State Treasurer shall give bond with at least one surety 2 or
more sufficient sureties, payable to and for the benefit of the
account owners participants in the College Savings Pool, in the
penal sum of $10,000,000 $1,000,000, conditioned upon the
faithful discharge of his or her duties in relation to the
College Savings Pool.
(Source: P.A. 91-607, eff. 1-1-00; 91-829, eff. 1-1-01; 91-943,
eff. 2-9-01; 92-16, eff. 6-28-01; 92-439, eff. 8-17-01; 92-626,
eff 7-11-02; 93-812, eff. 1-1-05; 95-23, eff. 8-3-07; 95-306,
eff. 1-1-08; 95-521, eff. 8-28-07; 95-876, eff. 8-21-08;
97-233, eff. 8-1-11; 97-537, eff. 8-23-11; 97-813, eff.
7-13-12; 99-143, eff. 7-27-15; 100-161, eff. 8-18-17; revised
10-2-17.)
Section 99. Effective date. This Act takes effect upon
becoming law.