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| Public Act 103-0778 | ||||
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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 | ||||
Sections 16.5 and 16.8 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; or (v) is a | ||
rollover to a Roth IRA account to the extent permitted by | ||
Section 529 of the Internal Revenue Code. | ||
"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 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; (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. 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 | ||
other actions 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 one or more contractors. 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. | ||
(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 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 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, 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 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. | ||
(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: | ||
(1) 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; , or | ||
(2) another qualified tuition program, to the extent | ||
permitted by Section 529 of the Internal Revenue Code; or | ||
(3) a Roth IRA account, 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. | ||
(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). | ||
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. | ||
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 are intended to be a restatement | ||
and clarification of existing law. | ||
(Source: P.A. 101-26, eff. 6-21-19; 101-81, eff. 7-12-19; | ||
102-186, eff. 7-30-21.) | ||
(15 ILCS 505/16.8) | ||
Sec. 16.8. Illinois Higher Education Savings Program. | ||
(a) Definitions. As used in this Section: | ||
"Beneficiary" means an eligible child named as a recipient | ||
of seed funds. | ||
"Eligible child" means a child born or adopted after | ||
December 31, 2022, to a parent who is a resident of Illinois at | ||
the time of the birth or adoption, as evidenced by | ||
documentation received by the Treasurer from the Department of | ||
Revenue, the Department of Public Health, or another State or | ||
local government agency, or a parent or legal guardian of the | ||
child. | ||
"Eligible educational institution" means institutions that | ||
are described in Section 1001 of the federal Higher Education | ||
Act of 1965 that are eligible to participate in Department of | ||
Education student aid programs. | ||
"Fund" means the Illinois Higher Education Savings Program | ||
Fund. | ||
"Omnibus account" means the pooled collection of seed | ||
funds owned and managed by the State Treasurer in the College | ||
Savings Pool under this Act. | ||
"Program" means the Illinois Higher Education Savings | ||
Program. | ||
"Qualified higher education expense" 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, computer software, or Internet access | ||
and related services as defined under Section 529 of the | ||
Internal Revenue Code; (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. | ||
"Seed funds" means the deposit made by the State Treasurer | ||
into the Omnibus Accounts for Program beneficiaries. | ||
(b) Program established. The State Treasurer shall | ||
establish the Illinois Higher Education Savings Program as a | ||
part of the College Savings Pool under Section 16.5 of this | ||
Act, subject to appropriation by the General Assembly. The | ||
State Treasurer shall administer the Program for the purposes | ||
of expanding access to higher education through savings. | ||
(c) Program enrollment. The State Treasurer shall enroll | ||
all eligible children in the Program beginning in 2023, after | ||
receiving records of recent births, adoptions, or dependents | ||
from the Department of Revenue, the Department of Public | ||
Health, or another State or local government agency designated | ||
by the Treasurer, or documentation as may be required by the | ||
Treasurer from a parent or legal guardian of the eligible | ||
child. Notwithstanding any court order which would otherwise | ||
prevent the release of information, the Department of Public | ||
Health is authorized to release the information specified | ||
under this subsection (c) to the State Treasurer for the | ||
purposes of the Program established under this Section. | ||
(1) Beginning in 2021, the Department of Public Health | ||
shall provide the State Treasurer with information on | ||
recent Illinois births and adoptions including, but not | ||
limited to: the full name, residential address, birth | ||
date, and birth record number of the child and the full | ||
name and residential address of the child's parent or | ||
legal guardian for the purpose of enrolling eligible | ||
children in the Program. This data shall be provided to | ||
the State Treasurer by the Department of Public Health on | ||
a quarterly basis, no later than 30 days after the end of | ||
each quarter, or some other date and frequency as mutually | ||
agreed to by the State Treasurer and the Department of | ||
Public Health. | ||
(1.5) Beginning in 2021, the Department of Revenue | ||
shall provide the State Treasurer with information on tax | ||
filers claiming dependents or the adoption tax credit | ||
including, but not limited to: the full name, residential | ||
address, email address, phone number, birth date, and | ||
social security number or taxpayer identification number | ||
of the dependent child and of the child's parent or legal | ||
guardian for the purpose of enrolling eligible children in | ||
the Program. This data shall be provided to the State | ||
Treasurer by the Department of Revenue on at least an | ||
annual basis, by July 1 of each year or another date | ||
jointly determined by the State Treasurer and the | ||
Department of Revenue. Notwithstanding anything to the | ||
contrary contained within this paragraph (2), the | ||
Department of Revenue shall not be required to share any | ||
information that would be contrary to federal law, | ||
regulation, or Internal Revenue Service Publication 1075. | ||
(2) The State Treasurer shall ensure the security and | ||
confidentiality of the information provided by the | ||
Department of Revenue, the Department of Public Health, or | ||
another State or local government agency, and it shall not | ||
be subject to release under the Freedom of Information | ||
Act. | ||
(3) Information provided under this Section shall only | ||
be used by the State Treasurer for the Program and shall | ||
not be used for any other purpose. | ||
(4) The State Treasurer and any vendors working on the | ||
Program shall maintain strict confidentiality of any | ||
information provided under this Section, and shall | ||
promptly provide written or electronic notice to the | ||
providing agency of any security breach. The providing | ||
State or local government agency shall remain the sole and | ||
exclusive owner of information provided under this | ||
Section. | ||
(d) Seed funds. After receiving information on recent | ||
births, adoptions, or dependents from the Department of | ||
Revenue, the Department of Public Health, or another State or | ||
local government agency, or documentation as may be required | ||
by the State Treasurer from a parent or legal guardian of the | ||
eligible child, the State Treasurer shall make deposits into | ||
an omnibus account on behalf of eligible children. The State | ||
Treasurer shall be the owner of the omnibus accounts. | ||
(1) Deposit amount. The seed fund deposit for each | ||
eligible child shall be in the amount of $50. This amount | ||
may be increased by the State Treasurer by rule. The State | ||
Treasurer may use or deposit funds appropriated by the | ||
General Assembly together with moneys received as gifts, | ||
grants, or contributions into the Fund. If insufficient | ||
funds are available in the Fund, the State Treasurer may | ||
reduce the deposit amount or forego deposits. | ||
(2) Use of seed funds. Seed funds, including any | ||
interest, dividends, and other earnings accrued, will be | ||
eligible for use by a beneficiary for qualified higher | ||
education expenses if: | ||
(A) the parent or guardian of the eligible child | ||
claimed the seed funds for the beneficiary by the | ||
beneficiary's 10th birthday; | ||
(B) the beneficiary has completed secondary | ||
education or has reached the age of 18; and | ||
(C) the beneficiary is currently a resident of the | ||
State of Illinois. Non-residents are not eligible to | ||
claim or use seed funds. | ||
(3) Notice of seed fund availability. The State | ||
Treasurer shall make a good faith effort to notify | ||
beneficiaries and their parents or legal guardians of the | ||
seed funds' availability and the deadline to claim such | ||
funds. | ||
(4) Unclaimed seed funds. Seed funds and any interest | ||
earnings that are unclaimed by the beneficiary's 10th | ||
birthday or unused by the beneficiary's 26th birthday will | ||
be considered forfeited. Unclaimed and unused seed funds | ||
and any interest earnings will remain in the omnibus | ||
account for future beneficiaries. | ||
(e) Financial education. The State Treasurer may develop | ||
educational materials that support the financial literacy of | ||
beneficiaries and their legal guardians, and may do so in | ||
collaboration with State and federal agencies, including, but | ||
not limited to, the Illinois State Board of Education and | ||
existing nonprofit agencies with expertise in financial | ||
literacy and education. | ||
(f) Supplementary deposits and partnerships. The State | ||
Treasurer may make supplementary deposits to children in | ||
financially insecure households if sufficient funds are | ||
available. Furthermore, the State Treasurer may develop | ||
partnerships with private, nonprofit, or governmental | ||
organizations to provide additional savings incentives, | ||
including conditional cash transfers or matching contributions | ||
that provide a savings incentive based on specific actions | ||
taken or other criteria. | ||
(g) Illinois Higher Education Savings Program Fund. The | ||
Illinois Higher Education Savings Program Fund is hereby | ||
established as a special fund in the State treasury. The Fund | ||
shall be the official repository of all contributions, | ||
appropriated funds, interest, and dividend payments, gifts, or | ||
other financial assets received by the State Treasurer in | ||
connection with the operation of the Program or related | ||
partnerships. All such moneys shall be deposited into the Fund | ||
and held by the State Treasurer as custodian thereof. The | ||
State Treasurer may accept gifts, grants, awards, matching | ||
contributions, interest income, and appropriated funds from | ||
individuals, businesses, governments, and other third-party | ||
sources to implement the Program on terms that the Treasurer | ||
deems advisable. All interest or other earnings accruing or | ||
received on amounts in the Illinois Higher Education Savings | ||
Program Fund shall be credited to and retained by the Fund and | ||
used for the benefit of the Program. Assets of the Fund must at | ||
all times be preserved, invested, and expended only for the | ||
purposes of the Program and must be held for the benefit of the | ||
beneficiaries. Assets may not be transferred or used by the | ||
State or the State Treasurer for any purposes other than the | ||
purposes of the Program. In addition, no moneys, interest, or | ||
other earnings paid into the Fund shall be used, temporarily | ||
or otherwise, for inter-fund borrowing or be otherwise used or | ||
appropriated except as expressly authorized by this Act. | ||
Notwithstanding the requirements of this subsection (g), | ||
amounts in the Fund may be used by the State Treasurer to pay | ||
the administrative costs of the Program. | ||
(g-5) Fund deposits and payments. On July 15 of each year, | ||
beginning July 15, 2023, or as soon thereafter as practical, | ||
the State Comptroller shall direct and the State Treasurer | ||
shall transfer the sum of $2,500,000, or the amount that is | ||
appropriated annually by the General Assembly, whichever is | ||
greater, from the General Revenue Fund to the Illinois Higher | ||
Education Savings Program Fund to be used for the | ||
administration and operation of the Program. | ||
(h) Audits and reports. The State Treasurer shall include | ||
the Illinois Higher Education Savings Program as part of the | ||
audit of the College Savings Pool described in Section 16.5. | ||
The State Treasurer shall annually prepare a report that | ||
includes a summary of the Program operations for the preceding | ||
fiscal year, including the number of children enrolled in the | ||
Program, the total amount of seed fund deposits, the rate of | ||
seed deposits claimed, and, to the extent data is reported and | ||
available, the racial, ethnic, socioeconomic, and geographic | ||
data of beneficiaries and of children in financially insecure | ||
households who may receive automatic bonus deposits. Such | ||
other information that is relevant to make a full disclosure | ||
of the operations of the Program and Fund may also be reported. | ||
The report shall be made available on the Treasurer's website | ||
by January 31 each year, starting in January of 2024. The State | ||
Treasurer may include the Program in other reports as | ||
warranted. | ||
(i) Rules. The State Treasurer may adopt rules necessary | ||
to implement this Section. | ||
(Source: P.A. 102-129, eff. 7-23-21; 102-558, eff. 8-20-21; | ||
102-1047, eff. 1-1-23; 103-8, eff. 6-7-23.) | ||
Section 99. Effective date. This Act takes effect upon | ||
becoming law. | ||