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HB4872 - 104th General Assembly

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB4872

Introduced , by Rep. Amy Elik

SYNOPSIS AS INTRODUCED:

15 ILCS 505/16.5

Amends the State Treasurer Act. Provides that qualified expenses
related to special needs services include elementary and secondary school
expenses incurred as a result of a recognized disability or an
individualized education program. Makes conforming changes to the
definition of "eligible educational institution". Defines "recognized
disability" as a physical, developmental, or learning disability
recognized by the State Board of Education.
LRB104 17843 SPS 31277 b

A BILL FOR

HB4872
LRB104 17843 SPS 31277 b
1

AN ACT concerning State government.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The State Treasurer Act is amended by changing
5
Section 16.5 as follows:

6

(15 ILCS 505/16.5)
7

Sec. 16.5.
College Savings Pool.
8

(a) Definitions. As used in this Section:
9

"Account owner" means any person or entity who has opened
10
an account or to whom ownership of an account has been
11
transferred, as allowed by the Internal Revenue Code, and who
12
has authority to withdraw funds, direct withdrawal of funds,
13
change the designated beneficiary, or otherwise exercise
14
control over an account in the College Savings Pool.
15

"Donor" means any person or entity who makes contributions
16
to an account in the College Savings Pool.
17

"Designated beneficiary" means any individual designated
18
as the beneficiary of an account in the College Savings Pool by
19
an account owner. A designated beneficiary must have a valid
20
social security number or taxpayer identification number. In
21
the case of an account established as part of a scholarship
22
program permitted under Section 529 of the Internal Revenue
23
Code, the designated beneficiary is any individual receiving

HB4872
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LRB104 17843 SPS 31277 b
1
benefits accumulated in the account as a scholarship.
2

"Eligible educational institution" means public and
3
private colleges, junior colleges, graduate schools, and
4
certain vocational institutions that are described in Section
5
1001 of the Higher Education Resource and Student Assistance
6
Chapter of Title 20 of the United States Code (20 U.S.C. 1001)
7
and that are eligible to participate in Department of
8
Education student aid programs.
"Eligible educational
9
institution" includes elementary and secondary educational
10
facilities in this State if the student attending the facility
11
has a recognized disability or an individualized education
12
program.
13

"Member of the family" has the same meaning ascribed to
14
that term under Section 529 of the Internal Revenue Code.
15

"Nonqualified withdrawal" means a distribution from an
16
account other than a distribution that (i) is used for the
17
qualified expenses of the designated beneficiary; (ii) results
18
from the beneficiary's death or disability; (iii) is a
19
rollover to another account in the College Savings Pool; (iv)
20
is a rollover to an Illinois ABLE account, as defined in
21
Section 16.6 of this Act, or any distribution that, within 60
22
days after such distribution, is transferred to an Illinois
23
ABLE account of the designated beneficiary or a member of the
24
family of the designated beneficiary to the extent that the
25
distribution, when added to all other contributions made to
26
the Illinois ABLE account for the taxable year, does not

HB4872
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LRB104 17843 SPS 31277 b
1
exceed the limitation under Section 529A(b) of the Internal
2
Revenue Code; or (v) is a rollover to a Roth IRA account to the
3
extent permitted by Section 529 of the Internal Revenue Code.
4

"Qualified expenses" means: (i) tuition, fees, and the
5
costs of books, supplies, and equipment required for
6
enrollment or attendance at an eligible educational
7
institution; (ii) expenses for special needs services, in the
8
case of a special needs beneficiary, which are incurred in
9
connection with such enrollment or attendance
, including
10
elementary and secondary school expenses incurred as a result
11
of a recognized disability or an individualized education
12
program
; (iii) certain expenses, to the extent they qualify as
13
qualified higher education expenses under Section 529 of the
14
Internal Revenue Code, for the purchase of computer or
15
peripheral equipment or Internet access and related services,
16
if such equipment, software, or services are to be used
17
primarily by the beneficiary during any of the years the
18
beneficiary is enrolled at an eligible educational
19
institution, except that, such expenses shall not include
20
expenses for computer software designed for sports, games, or
21
hobbies, unless the software is predominantly educational in
22
nature; (iv) room and board expenses incurred while attending
23
an eligible educational institution at least half-time; (v)
24
expenses for fees, books, supplies, and equipment required for
25
the participation of a designated beneficiary in an
26
apprenticeship program registered and certified with the

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Secretary of Labor under the National Apprenticeship Act (29
2
U.S.C. 50); and (vi) amounts paid as principal or interest on
3
any qualified education loan of the designated beneficiary or
4
a sibling of the designated beneficiary, as allowed under
5
Section 529 of the Internal Revenue Code. A student shall be
6
considered to be enrolled at least half-time if the student is
7
enrolled for at least half the full-time academic workload for
8
the course of study the student is pursuing as determined
9
under the standards of the institution at which the student is
10
enrolled.
11

"Recognized Disability" means a physical, developmental,
12
or learning disability recognized by the State Board of
13
Education, including, but not limited to, dyslexia or
14
dyscalculia.

15

(b) Establishment of the Pool. The State Treasurer may
16
establish and administer the College Savings Pool as a
17
qualified tuition program under Section 529 of the Internal
18
Revenue Code. The Pool may consist of one or more college
19
savings programs. The State Treasurer, in administering the
20
College Savings Pool, may: (1) receive, hold, and invest
21
moneys paid into the Pool; and (2) perform any other action he
22
or she deems necessary to administer the Pool, including any
23
other actions necessary to ensure that the Pool operates as a
24
qualified tuition program in accordance with Section 529 of
25
the Internal Revenue Code.
26

(c) Administration of the College Savings Pool. The State

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1
Treasurer may delegate duties related to the College Savings
2
Pool to one or more contractors. The contributions deposited
3
in the Pool, and any earnings thereon, shall not constitute
4
property of the State or be commingled with State funds and the
5
State shall have no claim to or against, or interest in, such
6
funds; provided that the fees collected by the State Treasurer
7
in accordance with this Act, scholarship programs administered
8
by the State Treasurer, and seed funds deposited by the State
9
Treasurer under Section 16.8 of the Act are State funds.
10

(c-5) College Savings Pool Account Summaries. The State
11
Treasurer shall provide a separate accounting for each
12
designated beneficiary. The separate accounting shall be
13
provided to the account owner of the account for the
14
designated beneficiary at least annually and shall show the
15
account balance, the investment in the account, the investment
16
earnings, and the distributions from the account.
17

(d) Availability of the College Savings Pool. The State
18
Treasurer may permit persons, including trustees of trusts and
19
custodians under a Uniform Transfers to Minors Act or Uniform
20
Gifts to Minors Act account, and certain legal entities to be
21
account owners, including as part of a scholarship program,
22
provided that: (1) an individual, trustee or custodian must
23
have a valid social security number or taxpayer identification
24
number, be at least 18 years of age, and have a valid United
25
States street address; and (2) a legal entity must have a valid
26
taxpayer identification number and a valid United States

HB4872
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LRB104 17843 SPS 31277 b
1
street address. In-state and out-of-state persons, trustees,
2
custodians, and legal entities may be account owners and
3
donors, and both in-state and out-of-state individuals may be
4
designated beneficiaries in the College Savings Pool.
5

(e) Fees. Any fees, costs, and expenses, including
6
investment fees and expenses and payments to third parties,
7
related to the College Savings Pool, shall be paid from the
8
assets of the College Savings Pool. The State Treasurer shall
9
establish fees to be imposed on accounts to cover such fees,
10
costs, and expenses, to the extent not paid directly out of the
11
investments of the College Savings Pool, and to maintain an
12
adequate reserve fund in line with industry standards for
13
government operated funds. The Treasurer must use his or her
14
best efforts to keep these fees as low as possible and
15
consistent with administration of high quality competitive
16
college savings programs.
17

(f) Investments in the State. To enhance the safety and
18
liquidity of the College Savings Pool, to ensure the
19
diversification of the investment portfolio of the College
20
Savings Pool, and in an effort to keep investment dollars in
21
the State of Illinois, the State Treasurer may make a
22
percentage of each account available for investment in
23
participating financial institutions doing business in the
24
State.
25

(g) Investment policy. The Treasurer shall develop,
26
publish, and implement an investment policy covering the

HB4872
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LRB104 17843 SPS 31277 b
1
investment of the moneys in each of the programs in the College
2
Savings Pool. The policy shall be published each year as part
3
of the audit of the College Savings Pool by the Auditor
4
General, which shall be distributed to all account owners in
5
such program. The Treasurer shall notify all account owners in
6
such program in writing, and the Treasurer shall publish in a
7
newspaper of general circulation in both Chicago and
8
Springfield, any changes to the previously published
9
investment policy at least 30 calendar days before
10
implementing the policy. Any investment policy adopted by the
11
Treasurer shall be reviewed and updated if necessary within 90
12
days following the date that the State Treasurer takes office.
13

(h) Investment restrictions. An account owner may,
14
directly or indirectly, direct the investment of his or her
15
account only as provided in Section 529(b)(4) of the Internal
16
Revenue Code. Donors and designated beneficiaries, in those
17
capacities, may not, directly or indirectly, direct the
18
investment of an account.
19

(i) Distributions. Distributions from an account in the
20
College Savings Pool may be used for the designated
21
beneficiary's qualified expenses, and if not used in that
22
manner, may be considered a nonqualified withdrawal. Funds
23
contained in a College Savings Pool account may be rolled over
24
into:
25

(1) an eligible Illinois ABLE account, as defined in
26

Section 16.6 of this Act to the extent permitted by

HB4872
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LRB104 17843 SPS 31277 b
1

Section 529 of the Internal Revenue Code;
2

(2) another qualified tuition program, to the extent
3

permitted by Section 529 of the Internal Revenue Code; or
4

(3) a Roth IRA account, to the extent permitted by
5

Section 529 of the Internal Revenue Code.
6

Distributions made from the College Savings Pool may be
7
made directly to the eligible educational institution,
8
directly to a vendor, in the form of a check payable to both
9
the designated beneficiary and the institution or vendor,
10
directly to the designated beneficiary or account owner, or in
11
any other manner that is permissible under Section 529 of the
12
Internal Revenue Code.
13

(j) Contributions. Contributions to the College Savings
14
Pool shall be as follows:
15

(1) Contributions to an account in the College Savings
16

Pool may be made only in cash.
17

(2) The Treasurer shall limit the contributions that
18

may be made to the College Savings Pool on behalf of a
19

designated beneficiary, as required under Section 529 of
20

the Internal Revenue Code, to prevent contributions for
21

the benefit of a designated beneficiary in excess of those
22

necessary to provide for the qualified expenses of the
23

designated beneficiary. The Pool shall not permit any
24

additional contributions to an account as soon as the sum
25

of (i) the aggregate balance in all accounts in the Pool
26

for the designated beneficiary and (ii) the aggregate

HB4872
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LRB104 17843 SPS 31277 b
1

contributions in the Illinois Prepaid Tuition Program for
2

the designated beneficiary reaches the specified balance
3

limit established from time to time by the Treasurer.
4

(k) Illinois Student Assistance Commission. The Treasurer
5
and the Illinois Student Assistance Commission shall each
6
cooperate in providing each other with account information, as
7
necessary, to prevent contributions in excess of those
8
necessary to provide for the qualified expenses of the
9
designated beneficiary, as described in subsection (j).
10

The Treasurer shall work with the Illinois Student
11
Assistance Commission to coordinate the marketing of the
12
College Savings Pool and the Illinois Prepaid Tuition Program
13
when considered beneficial by the Treasurer and the Director
14
of the Illinois Student Assistance Commission.
15

(l) Prohibition; exemption. No interest in the program, or
16
any portion thereof, may be used as security for a loan. Moneys
17
held in an account invested in the College Savings Pool shall
18
be exempt from all claims of the creditors of the account
19
owner, donor, or designated beneficiary of that account,
20
except for the non-exempt College Savings Pool transfers to or
21
from the account as defined under subsection (j) of Section
22
12-1001 of the Code of Civil Procedure.
23

(m) Taxation. The assets of the College Savings Pool and
24
its income and operation shall be exempt from all taxation by
25
the State of Illinois and any of its subdivisions. The accrued
26
earnings on investments in the Pool once disbursed on behalf

HB4872
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LRB104 17843 SPS 31277 b
1
of a designated beneficiary shall be similarly exempt from all
2
taxation by the State of Illinois and its subdivisions, so
3
long as they are used for qualified expenses. Contributions to
4
a College Savings Pool account during the taxable year may be
5
deducted from adjusted gross income as provided in Section 203
6
of the Illinois Income Tax Act. The provisions of this
7
paragraph are exempt from Section 250 of the Illinois Income
8
Tax Act.
9

(n) Rules. The Treasurer shall adopt rules he or she
10
considers necessary for the efficient administration of the
11
College Savings Pool. The rules shall provide whatever
12
additional parameters and restrictions are necessary to ensure
13
that the College Savings Pool meets all the requirements for a
14
qualified tuition program under Section 529 of the Internal
15
Revenue Code.
16

Notice of any proposed amendments to the rules and
17
regulations shall be provided to all account owners prior to
18
adoption.
19

(o) Bond. The State Treasurer shall give bond with at
20
least one surety, payable to and for the benefit of the account
21
owners in the College Savings Pool, in the penal sum of
22
$10,000,000, conditioned upon the faithful discharge of his or
23
her duties in relation to the College Savings Pool.
24

(p) The changes made to subsections (c) and (e) of this
25
Section by Public Act 101-26 are intended to be a restatement
26
and clarification of existing law.

HB4872
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LRB104 17843 SPS 31277 b
1
(Source: P.A. 103-778, eff. 8-2-24; 104-314, eff. 1-1-26
.)

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