Via Facsimile
December 4, 2002
Senator James “Pate” Philip
Senate President
327 Capitol Building
Springfield, IL 62706
Senator Stanley B. Weaver
329 Capitol Building
Springfield, IL 62706
Re: SB 729 Should Be Enacted
Dear Senators Philip and Weaver:
The Investment Company Institute1 urges your support for Illinois families saving for college. SB 729 will help Illinois families attain their savings goals by encouraging them to invest in qualified state tuition programs established under Section 529 of the Internal Revenue Code (“529 Plan”). Specifically, the bill would amend the State Treasurer Act and the Illinois Income Tax Act to provide Illinois residents with (i) a deduction for contributions to both an Illinois and an out-of-state 529 plan and (ii) an exclusion from gross income for amounts withdrawn from any state 529 Plan that would qualify for exclusion under federal law.
Spiraling education cost is a significant issue for Illinois families. The Institute supports efforts that encourage college savings, like SB 729. Among other things, SB 729 would conform Illinois tax treatment of qualifying withdrawals from 529 Plans to federal law. The federal exclusion for qualifying withdrawals from 529 Plans has had a major impact on the growth of these savings vehicles and has encouraged American families to save for their children’s college education. Recognizing the impact of federal law on the success of 529 plans, most states already have conformed their state tax treatment of withdrawals to federal law and most of the nonconforming states are in the process of conforming. Federal conformity with respect to withdrawals will make it easier for Illinois families to save for college. In addition, federal conformity will simplify tax compliance for Illinois residents.
We urge you to support enactment of SB 729.
Sincerely,
Matthew P. Fink
President