Bill Text: IL SB0558 | 2021-2022 | 102nd General Assembly | Engrossed

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Bill Title: Amends the State Treasurer Act. Modifies provisions concerning the College Savings Pool. Provides that "qualified expenses" includes qualified higher education expenses as defined under the Internal Revenue Code.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Engrossed - Dead) 2022-06-15 - Chief Sponsor Changed to Sen. Don Harmon [SB0558 Detail]

Download: Illinois-2021-SB0558-Engrossed.html

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SB0558 Engrossed LRB102 16592 RJF 21989 b
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.
"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,
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

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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 educational in nature; and (iv) room and board
expenses incurred while attending an eligible educational
institution at least half-time; and (v) qualified higher
education expenses as defined in 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

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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 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.
(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; provided that
the State Treasurer may collect fees in accordance with this
Act.
(c-5) 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

SB0558 Engrossed - 5 - LRB102 16592 RJF 21989 b
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
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 cover 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.
(f) Investments in the State. To enhance the safety and

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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 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

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capacities, may not, directly or indirectly, direct the
investment of 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. 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, 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
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

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designated beneficiary. 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 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 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

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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
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

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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 this amendatory Act of the 101st General Assembly
are intended to be a restatement and clarification of existing
law.
(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.)