Public Act 102-0186
 
HB0741 EnrolledLRB102 10143 RJF 15465 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 
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, 
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 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 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 
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. 
    (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 
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 
    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 
    contributions 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 
and the Illinois Student Assistance Commission shall each 
cooperate in providing each other with account information, as 
necessary, to prevent contributions in excess of those 
necessary to provide for the qualified expenses of the 
designated beneficiary, as described in subsection (j) 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 
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 
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. 
(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.