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1 | AN ACT concerning State government.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The State Treasurer Act is amended by changing | |||||||||||||||||||
5 | Section 16.6 as follows: | |||||||||||||||||||
6 | (15 ILCS 505/16.6) | |||||||||||||||||||
7 | Sec. 16.6. ABLE account program. | |||||||||||||||||||
8 | (a) As used in this Section: | |||||||||||||||||||
9 | "ABLE account" or "account" means an account established | |||||||||||||||||||
10 | for the purpose of financing certain qualified expenses of | |||||||||||||||||||
11 | eligible individuals as specifically provided for in this | |||||||||||||||||||
12 | Section and authorized by Section 529A of the Internal Revenue | |||||||||||||||||||
13 | Code. | |||||||||||||||||||
14 | "ABLE account plan" or "plan" means the savings account | |||||||||||||||||||
15 | plan provided for in this Section. | |||||||||||||||||||
16 | "Account administrator" means the person selected by the | |||||||||||||||||||
17 | State Treasurer to administer the daily operations of the ABLE | |||||||||||||||||||
18 | account plan and provide marketing, recordkeeping, investment | |||||||||||||||||||
19 | management, and other services for the plan. | |||||||||||||||||||
20 | "Aggregate account balance" means the amount in an account | |||||||||||||||||||
21 | on a particular date or the fair market value of an account on | |||||||||||||||||||
22 | a particular date. | |||||||||||||||||||
23 | "Beneficiary" means the ABLE account owner. |
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1 | "Board" means the Illinois State Board of Investment. | ||||||
2 | "Contracting state" means a state without a qualified ABLE | ||||||
3 | program which has entered into a contract with Illinois to | ||||||
4 | provide residents of the contracting state access to a | ||||||
5 | qualified ABLE program. | ||||||
6 | "Designated representative" means a person who is | ||||||
7 | authorized to act on behalf of an account owner. An account | ||||||
8 | owner is authorized to act on his or her own behalf unless the | ||||||
9 | account owner is a minor or the account owner has been | ||||||
10 | adjudicated to have a disability so that a guardian has been | ||||||
11 | appointed. A designated representative acts in a fiduciary | ||||||
12 | capacity to the account owner. The State Treasurer shall | ||||||
13 | recognize a person as a designated representative without | ||||||
14 | appointment by a court in the following order of priority: | ||||||
15 | (1) The account owner's plenary guardian of the estate, | ||||||
16 | or the account owner's limited guardian of financial or | ||||||
17 | contractual matters. Any guardian acting in this capacity | ||||||
18 | shall not be required to seek court approval for any ABLE | ||||||
19 | qualified distributions. | ||||||
20 | (2) The agent named by the account owner in a property | ||||||
21 | power of attorney recognized as a statutory short form | ||||||
22 | power of attorney for property. | ||||||
23 | (3) Such individual or entity that the account owner so | ||||||
24 | designates in writing, in a manner to be established by the | ||||||
25 | State Treasurer. | ||||||
26 | (4) Such other individual or entity designated by the |
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1 | State Treasurer pursuant to its rules. | ||||||
2 | "Disability certification" has the meaning given to that | ||||||
3 | term under Section 529A of the Internal Revenue Code. | ||||||
4 | "Eligible individual" has the meaning given to that term | ||||||
5 | under Section 529A of the Internal Revenue Code. | ||||||
6 | "Participation agreement" means an agreement to | ||||||
7 | participate in the ABLE account plan between an account owner | ||||||
8 | and the State, through its agencies and the State Treasurer. | ||||||
9 | "Qualified disability expenses" has the meaning given to | ||||||
10 | that term under Section 529A of the Internal Revenue Code. | ||||||
11 | "Qualified withdrawal" or "qualified distribution" means a | ||||||
12 | withdrawal from an ABLE account to pay the qualified disability | ||||||
13 | expenses of the beneficiary of the account. | ||||||
14 | (b) The "Achieving a Better Life Experience" or "ABLE" | ||||||
15 | account program is hereby created and shall be administered by | ||||||
16 | the State Treasurer. The purpose of the ABLE plan is to | ||||||
17 | encourage and assist individuals and families in saving private | ||||||
18 | funds for the purpose of supporting individuals with | ||||||
19 | disabilities to maintain health, independence, and quality of | ||||||
20 | life, and to provide secure funding for disability-related | ||||||
21 | expenses on behalf of designated beneficiaries with | ||||||
22 | disabilities that will supplement, but not supplant, benefits | ||||||
23 | provided through private insurance, federal and State medical | ||||||
24 | and disability insurance, the beneficiary's employment, and | ||||||
25 | other sources. Under the plan, a person may make contributions | ||||||
26 | to an ABLE account to meet the qualified disability expenses of |
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1 | the designated beneficiary of the account. The plan must be | ||||||
2 | operated as an accounts-type plan that permits persons to save | ||||||
3 | for qualified disability expenses incurred by or on behalf of | ||||||
4 | an eligible individual. | ||||||
5 | The State Treasurer shall promote awareness of the | ||||||
6 | availability and advantages of the ABLE account plan as a way | ||||||
7 | to assist individuals and families in saving private funds for | ||||||
8 | the purpose of supporting individuals with disabilities. The | ||||||
9 | cost of these promotional efforts shall not be funded with fees | ||||||
10 | imposed on participants by the State Treasurer. | ||||||
11 | The State Treasurer shall not accept contributions for ABLE | ||||||
12 | accounts under this Section until the Internal Revenue Service | ||||||
13 | has issued its final regulations or interim guidance concerning | ||||||
14 | ABLE accounts. | ||||||
15 | A separate account must be maintained for each beneficiary | ||||||
16 | for whom contributions are made, and no more than one account | ||||||
17 | shall be established per beneficiary. If an ABLE account is | ||||||
18 | established for a designated beneficiary, no account | ||||||
19 | subsequently established for such beneficiary shall be treated | ||||||
20 | as an ABLE account. The preceding sentence shall not apply in | ||||||
21 | the case of an ABLE account established for purposes of a | ||||||
22 | rollover as permitted under Section 529A of the Internal | ||||||
23 | Revenue Code. | ||||||
24 | An ABLE account may be established under this Section for a | ||||||
25 | designated beneficiary who is a resident of Illinois, a | ||||||
26 | resident of a contracting state, or a resident of any other |
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1 | state. | ||||||
2 | Prior to the establishment of an ABLE account, an account | ||||||
3 | owner must provide documentation to the State Treasurer that | ||||||
4 | the account beneficiary is an eligible individual. | ||||||
5 | Annual contributions to an ABLE account on behalf of a | ||||||
6 | beneficiary are subject to the requirements of subsection (b) | ||||||
7 | of Section 529A of the Internal Revenue Code. No person may | ||||||
8 | make a contribution to an ABLE account if such a contribution | ||||||
9 | would result in the aggregate account balance of an ABLE | ||||||
10 | account exceeding the account balance limit authorized under | ||||||
11 | Section 529A of the Internal Revenue Code. The Treasurer shall | ||||||
12 | review the contribution limit at least annually. | ||||||
13 | The State Treasurer shall administer the plan, including | ||||||
14 | accepting and processing applications, maintaining account | ||||||
15 | records, making payments, and undertaking any other necessary | ||||||
16 | tasks to administer the plan, including the appointment of an | ||||||
17 | account administrator. The State Treasurer may contract with | ||||||
18 | one or more third parties to carry out some or all of these | ||||||
19 | administrative duties, including, but not limited to, | ||||||
20 | providing investment management services, incentives, and | ||||||
21 | marketing the plan. | ||||||
22 | In designing and establishing the plan's requirements and | ||||||
23 | in negotiating or entering into contracts with third parties | ||||||
24 | under this Section, the State Treasurer shall consult with the | ||||||
25 | Board. The State Treasurer shall establish fees to be imposed | ||||||
26 | on participants to recover the costs of administration, |
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1 | recordkeeping, and investment management. The State Treasurer | ||||||
2 | must use his or her best efforts to keep these fees as low as | ||||||
3 | possible, consistent with efficient administration. | ||||||
4 | The Illinois ABLE Accounts Administrative Fund is created | ||||||
5 | as a nonappropriated trust fund in the State treasury. The | ||||||
6 | State Treasurer shall use moneys in the Administrative Fund to | ||||||
7 | pay for administrative expenses he or she incurs in the | ||||||
8 | performance of his or her duties under this Section. The State | ||||||
9 | Treasurer shall use moneys in the Administrative Fund to cover | ||||||
10 | administrative expenses incurred under this Section. The | ||||||
11 | Administrative Fund may receive any grants or other moneys | ||||||
12 | designated for administrative purposes from the State, or any | ||||||
13 | unit of federal, state, or local government, or any other | ||||||
14 | person, firm, partnership, or corporation. Any interest | ||||||
15 | earnings that are attributable to moneys in the Administrative | ||||||
16 | Fund must be deposited into the Administrative Fund. Any fees | ||||||
17 | established by the State Treasurer to recover the costs of | ||||||
18 | administration, recordkeeping, and investment management shall | ||||||
19 | be deposited into the Administrative Fund. | ||||||
20 | Subject to appropriation, the State Treasurer may pay | ||||||
21 | administrative costs associated with the creation and | ||||||
22 | management of the plan until sufficient assets are available in | ||||||
23 | the Administrative Fund for that purpose. | ||||||
24 | Applications for accounts, account owner data, account | ||||||
25 | data, and data on beneficiaries of accounts are confidential | ||||||
26 | and exempt from disclosure under the Freedom of Information |
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1 | Act. | ||||||
2 | (c) The State Treasurer may invest the moneys in ABLE | ||||||
3 | accounts in the same manner and in the same types of | ||||||
4 | investments provided for the investment of moneys by the Board. | ||||||
5 | To enhance the safety and liquidity of ABLE accounts, to ensure | ||||||
6 | the diversification of the investment portfolio of accounts, | ||||||
7 | and in an effort to keep investment dollars in the State, the | ||||||
8 | State Treasurer may make a percentage of each account available | ||||||
9 | for investment in participating financial institutions doing | ||||||
10 | business in the State, except that the accounts may be invested | ||||||
11 | without limit in investment options from open-ended investment | ||||||
12 | companies registered under Section 80a of the federal | ||||||
13 | Investment Company Act of 1940. The State Treasurer may | ||||||
14 | contract with one or more third parties for investment | ||||||
15 | management, recordkeeping, or other services in connection | ||||||
16 | with investing the accounts. | ||||||
17 | The account administrator shall annually prepare and adopt | ||||||
18 | a written statement of investment policy that includes a risk | ||||||
19 | management and oversight program. The risk management and | ||||||
20 | oversight program shall be designed to ensure that an effective | ||||||
21 | risk management system is in place to monitor the risk levels | ||||||
22 | of the ABLE plan, to ensure that the risks taken are prudent | ||||||
23 | and properly managed, to provide an integrated process for | ||||||
24 | overall risk management, and to assess investment returns as | ||||||
25 | well as risk to determine if the risks taken are adequately | ||||||
26 | compensated compared to applicable performance benchmarks and |
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1 | standards. | ||||||
2 | The State Treasurer may enter into agreements with other | ||||||
3 | states to either allow Illinois residents to participate in a | ||||||
4 | plan operated by another state or to allow residents of other | ||||||
5 | states to participate in the Illinois ABLE plan. | ||||||
6 | (d) The State Treasurer shall ensure that the plan meets | ||||||
7 | the requirements for an ABLE account under Section 529A of the | ||||||
8 | Internal Revenue Code. The State Treasurer may request a | ||||||
9 | private letter ruling or rulings from the Internal Revenue | ||||||
10 | Service and must take any necessary steps to ensure that the | ||||||
11 | plan qualifies under relevant provisions of federal law. | ||||||
12 | Notwithstanding the foregoing, any determination by the | ||||||
13 | Secretary of the Treasury of the United States that an account | ||||||
14 | was utilized to make non-qualified distributions shall not | ||||||
15 | result in an ABLE account being disregarded as a resource. | ||||||
16 | A person may make contributions to an ABLE account on | ||||||
17 | behalf of a beneficiary. Contributions to an account made by | ||||||
18 | persons other than the account owner become the property of the | ||||||
19 | account owner. Contributions to an account shall be considered | ||||||
20 | as a transfer of assets for fair market value. A person does | ||||||
21 | not acquire an interest in an ABLE account by making | ||||||
22 | contributions to an account. A contribution to any account for | ||||||
23 | a beneficiary must be rejected if the contribution would cause | ||||||
24 | either the aggregate or annual account balance of the account | ||||||
25 | to exceed the limits imposed by Section 529A of the Internal | ||||||
26 | Revenue Code. |
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1 | Any change in account owner must be done in a manner | ||||||
2 | consistent with Section 529A of the Internal Revenue Code. | ||||||
3 | Notice of any proposed amendments to the rules and | ||||||
4 | regulations shall be provided to all owners or their designated | ||||||
5 | representatives prior to adoption. Amendments to rules and | ||||||
6 | regulations shall apply only to contributions made after the | ||||||
7 | adoption of the amendment. Amendments to this Section | ||||||
8 | automatically amend the participation agreement. Any | ||||||
9 | amendments to the operating procedures and policies of the plan | ||||||
10 | shall automatically amend the participation agreement after | ||||||
11 | adoption by the State Treasurer. | ||||||
12 | All assets of the plan, including any contributions to | ||||||
13 | accounts, are held in trust for the exclusive benefit of the | ||||||
14 | account owner and shall be considered spendthrift accounts | ||||||
15 | exempt from all of the owner's creditors. The plan shall | ||||||
16 | provide separate accounting for each designated beneficiary | ||||||
17 | sufficient to satisfy the requirements of paragraph (3) of | ||||||
18 | subsection (b) of Section 529A of the Internal Revenue Code. | ||||||
19 | Assets must be held in either a state trust fund outside the | ||||||
20 | State treasury, to be known as the Illinois ABLE plan trust | ||||||
21 | fund, or in accounts with a third-party provider selected | ||||||
22 | pursuant to this Section. Amounts contributed to ABLE accounts | ||||||
23 | shall not be commingled with State funds and the State shall | ||||||
24 | have no claim to or against, or interest in, such funds. | ||||||
25 | Plan assets are not subject to claims by creditors of the | ||||||
26 | State and are not subject to appropriation by the State. |
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1 | Payments from the Illinois ABLE account plan shall be made | ||||||
2 | under this Section. | ||||||
3 | The assets of ABLE accounts and their income may not be | ||||||
4 | used as security for a loan. | ||||||
5 | The assets of ABLE accounts and their income and operation | ||||||
6 | shall be exempt from all taxation by the State of Illinois and | ||||||
7 | any of its subdivisions to the extent exempt from federal | ||||||
8 | income taxation. The accrued earnings on investments in an ABLE | ||||||
9 | account once disbursed on behalf of a designated beneficiary | ||||||
10 | shall be similarly exempt from all taxation by the State of | ||||||
11 | Illinois and its subdivisions to the extent exempt from federal | ||||||
12 | income taxation, so long as they are used for qualified | ||||||
13 | expenses. | ||||||
14 | Notwithstanding any other provision of law that requires | ||||||
15 | consideration of one or more financial circumstances of an | ||||||
16 | individual, for the purpose of determining eligibility to | ||||||
17 | receive, or the amount of, any assistance or benefit authorized | ||||||
18 | by such provision to be provided to or for the benefit of such | ||||||
19 | individual, any amount, including earnings thereon, in the ABLE | ||||||
20 | account of such individual, any contributions to the ABLE | ||||||
21 | account of the individual, and any distribution for qualified | ||||||
22 | disability expenses shall be disregarded for such purpose with | ||||||
23 | respect to any period during which such individual maintains, | ||||||
24 | makes contributions to, or receives distributions from such | ||||||
25 | ABLE account. | ||||||
26 | (e) The account owner or the designated representative of |
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1 | the account owner may request that a qualified distribution be | ||||||
2 | made for the benefit of the account owner. Qualified | ||||||
3 | distributions shall be made for qualified disability expenses | ||||||
4 | allowed pursuant to Section 529A of the Internal Revenue Code. | ||||||
5 | Qualified distributions must be withdrawn proportionally from | ||||||
6 | contributions and earnings in an account owner's account on the | ||||||
7 | date of distribution as provided in Section 529A of the | ||||||
8 | Internal Revenue Code. Unless prohibited by federal law, upon | ||||||
9 | the death of a designated beneficiary, proceeds from an account | ||||||
10 | may be transferred to the estate of a designated beneficiary, | ||||||
11 | or to an account for another eligible individual specified by | ||||||
12 | the designated beneficiary or the estate of the designated | ||||||
13 | beneficiary. An agency or instrumentality of the State may not | ||||||
14 | seek payment under subsection (f) of Section 529A of the | ||||||
15 | federal Internal Revenue Code from the account or its proceeds | ||||||
16 | for benefits provided to a designated beneficiary. Upon the | ||||||
17 | death of a beneficiary, the amount remaining in the | ||||||
18 | beneficiary's account must be distributed pursuant to | ||||||
19 | subsection (f) of Section 529A of the Internal Revenue Code. | ||||||
20 | (f) The State Treasurer may adopt rules to carry out the | ||||||
21 | purposes of this Section. The State Treasurer shall further | ||||||
22 | have the power to issue peremptory rules necessary to ensure | ||||||
23 | that ABLE accounts meet all of the requirements for a qualified | ||||||
24 | state ABLE program under Section 529A of the Internal Revenue | ||||||
25 | Code and any regulations issued by the Internal Revenue | ||||||
26 | Service.
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1 | (Source: P.A. 99-145, eff. 1-1-16; 99-563, eff. 7-15-16.)
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2 | Section 99. Effective date. This Act takes effect upon | ||||||
3 | becoming law.
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