Bill Text: IL HB4937 | 2021-2022 | 102nd General Assembly | Engrossed

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Bill Title: Amends the State Treasurer Act. In provisions concerning the ABLE account program, provides that a "designated representative" means a person or entity (currently, person only) who is authorized to act on behalf of a "designated beneficiary". Provides that a person or entity seeking to open an ABLE account on behalf of a designated beneficiary must provide certification, subject to penalties of perjury, of the basis for the person's or entity's authority to act as a designated representative and that there is no other person or entity with higher priority to establish the ABLE account. Removes provisions allowing the State Treasurer to recognize specified persons or entities as a designated representative without appointment by a court. Provides that the State Treasurer may require any certifications that he or she deems necessary to implement the ABLE program, including oaths or affirmations made under penalties of perjury. Defines "Internal Revenue Code". Effective immediately.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Engrossed - Dead) 2022-03-04 - Referred to Assignments [HB4937 Detail]

Download: Illinois-2021-HB4937-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 16.6 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 or entity
selected by the 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.

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"Beneficiary" or "designated beneficiary" means the ABLE
account owner.
"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 or entity who
is authorized to act on behalf of a "designated beneficiary".
A designated beneficiary is authorized to act on his or her own
behalf unless the designated beneficiary is a minor or the
designated beneficiary has been adjudicated to have a
disability so that a guardian has been appointed. A designated
representative acts in a fiduciary capacity to the designated
beneficiary. A person or entity seeking to open an ABLE
account on behalf of a designated beneficiary must provide
certification, subject to penalties of perjury, of the basis
for the person's or entity's authority to act as a designated
representative and that there is no other person or entity
with higher priority to establish the ABLE account under
Section 529A of the Internal Revenue Code and federal
regulations. The State Treasurer shall recognize the following
as a designated representative without appointment by a court:
(1) The designated beneficiary's guardian of the
person, plenary guardian of the estate, limited guardian
of financial or contractual matters, or any other
State-appointed guardian. A guardian acting in this

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capacity shall not be required to seek court approval for
any ABLE account activity.
(2) The agent named by the designated beneficiary in a
property power of attorney recognized as a statutory short
form power of attorney for property.
(3) Such individual or entity that the designated
beneficiary 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.
"Internal Revenue Code" means the federal Internal Revenue
Code.
"Participation agreement" means an agreement to
participate in the ABLE account plan between a designated
beneficiary 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) Establishment of the ABLE Program. The "Achieving a

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Better Life Experience" or "ABLE" account program is hereby
created and shall be administered by the State Treasurer. The
purpose of the ABLE program 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 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.
(c) Promotion of the ABLE Program. 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.
(d) Availability of the ABLE Program. 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.

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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. 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 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 Sections 529 and 529A of the Internal Revenue
Code.
(e) Administration of the ABLE Program. 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,
providing investment management services, incentives, and

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marketing the plan. 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. The State Treasurer may require any
certifications that he or she deems necessary to implement the
Program, including oaths or affirmations made under penalties
of perjury.
(f) Fees. The State Treasurer may establish fees to be
imposed on participants to cover 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.
(g) The Illinois ABLE Accounts Administrative Fund. 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 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 cover the costs of
administration, recordkeeping, and investment management shall

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be deposited into the Administrative Fund.
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.
(h) Privacy. Applications for accounts, designated
beneficiary data, account data, and data on beneficiaries of
accounts are confidential and exempt from disclosure under the
Freedom of Information Act.
(i) Investment Policy. The Treasurer shall prepare and
adopt a written statement of investment policy that includes a
risk management and oversight program which shall be reviewed
annually and posted on the Treasurer's website prior to
implementation. The risk management and 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.
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

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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.
(j) Investment restrictions. 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.
(k) Contributions. A person may make contributions to an
ABLE account on behalf of a beneficiary. Contributions to an
account made by persons other than the designated beneficiary
become the property of the designated beneficiary.
Contributions to an account shall be considered 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

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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 designated beneficiary must be done in a
manner consistent with Section 529A of the Internal Revenue
Code.
(l) Notice. Notice of any proposed amendments to the rules
and regulations shall be provided to all designated
beneficiaries 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.
(m) Plan assets. All assets of the plan, including any
contributions to accounts, are held in trust for the exclusive
benefit of the designated beneficiary and shall be considered
spendthrift accounts exempt from all of the designated
beneficiary'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 State treasury, to be

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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.
(n) Taxation. 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

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thereon, in the ABLE 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.
(o) Distributions. The designated beneficiary or the
designated representative of the designated beneficiary may
make a qualified distribution for the benefit of the
designated beneficiary. 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 a designated beneficiary'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, or transferred pursuant to a payable on death
account agreement. A payable on death account agreement may be
executed by the designated beneficiary or a designated
representative who has been granted such power. Upon the death
of a designated beneficiary, prior to distribution of the
balance to the estate, account for another eligible

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individual, or transfer pursuant to a payable on death account
agreement, the State Treasurer may require verification that
the funeral and burial expenses of the designated beneficiary
have been paid. 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.
(p) Rules. 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. 101-329, eff. 8-9-19; 102-392, eff. 8-16-21.)
Section 99. Effective date. This Act takes effect upon
becoming law.