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An Act
ENROLLED SENATE
BILL NO. 1989 By: Nice of the Senate
and
Osburn of the House
An Act relating to the Oklahoma College Savings Plan;
amending 70 O.S. 2021, Section 3970.7, which relates
to operation through use of accounts; expanding
options for making contributions to accounts;
updating statutory language; updating statutory
reference; and providing an effective date.
SUBJECT: Oklahoma College Savings Plan
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 70 O.S. 2021, Section 3970.7, is
amended to read as follows:
Section 3970.7. A. The program shall be operated through the
use of accounts. An account may be opened by any person who desires
to save to pay the qualified higher education expenses of a person
by:
1. Completing an application in the form prescribed by the
Board;
2. Paying the one-time application fee established by the
Board;
3. Making the minimum contribution required by the Board or by
opening an account; and
ENR. S. B. NO. 1989 Page 2
4. Designating the type of account to be opened if more than
one type of account is offered.
B. Any person may make contributions to an account after the
account is opened.
C. Contributions to accounts may be made only in cash or by the
use of digital peer-to-peer payment networks and digital payment
networks.
D. Account owners may withdraw all or part of the balance from
an account on sixty (60) days’ notice, or a shorter period as may be
authorized by the Board, under rules prescribed by the Board. These
rules shall include provisions that will generally enable the Board
or program manager to determine if a withdrawal is a nonqualified
withdrawal or a qualified withdrawal. The rules may, but need not,
require one or more of the following:
1. Account owners seeking to make a qualified withdrawal or
other withdrawal that is not a nonqualified withdrawal shall provide
certifications, copies of bills for qualified higher education
expenses or other supporting material;
2. Qualified withdrawals from an account shall be made only by
a check payable jointly to the designated beneficiary and a higher
education institution; or
3. Withdrawals not meeting certain requirements shall be
treated as nonqualified withdrawals by the program manager.
E. An account owner may change the designated beneficiary of an
account to an individual who is a member of the family of the former
designated beneficiary in accordance with procedures established by
the Board.
F. An account owner may make the following changes and
transfers relating to the account:
1. Change the beneficiary of the account;
2. Transfer funds between accounts; and
ENR. S. B. NO. 1989 Page 3
3. Transfer funds between an account and an account in a
qualified tuition program in another state or make a deposit to a
new or existing account or to an account in a qualified tuition
program in another state.
The account owner shall be informed that certain tax
consequences may apply to these changes.
G. An account owner may make the changes, transfers, and
withdrawals described in subsection F of this section to an account
that is owned by the account owner. The account owner may also make
transfers to an account that is owned by another person. If a
change of beneficiary or transfer causes the total account balance
for all accounts under the program for the new beneficiary to exceed
the maximum account balance limit, the excess amount shall be
rejected and returned to the account owner.
H. In the case of any nonqualified withdrawal from an account,
an amount of not more than five percent (5%) of the proposed
withdrawal may be withheld as a penalty and paid to the Board for
use in operating and marketing the program and for state student
financial aid.
I. The Board may set the percentage of the penalty prescribed
in subsection H of this section or change the basis of this penalty
if the Board determines that establishing a penalty or raising an
existing penalty is needed to discourage nonqualified withdrawals.
J. If an account owner makes a nonqualified withdrawal and no
penalty amount is withheld pursuant to subsection H of this section
or the amount withheld was less than the amount required to be
withheld under that subsection for nonqualified withdrawals, the
account owner shall pay the unpaid portion of the penalty to the
Board on or before April 15 of the following tax year.
K. Each account for each designated beneficiary shall be
maintained separately from each other account under the program.
L. Separate records and accounting shall be maintained for each
account for each designated beneficiary.
ENR. S. B. NO. 1989 Page 4
M. Except as permitted by 26 U.S.C., Section 529 of the
Internal Revenue Code, no contributor to, account owner of, or
designated beneficiary of any account may directly or indirectly
direct the investment of any contributions to an account or the
earnings from the account.
N. If the Board terminates the authority of a financial
institution to hold accounts and accounts must be moved from that
financial institution to another financial institution, the Board
shall select the financial institution and type of investment to
which the balance of the account is moved unless the Internal
Revenue Service provides guidance stating that allowing the account
owner to select among several financial institutions that are then
contractors would not cause a plan to cease to be a qualified state
tuition plan.
O. Neither an account owner nor a designated beneficiary may
use an interest in an account as security for a loan. Any pledge of
an interest in an account is of no force and effect.
P. The Board shall adopt guidelines and procedures to prevent
contributions on behalf of a designated beneficiary in excess of
those necessary to pay the qualified higher education expenses of
the designated beneficiaries. The guidelines may address the
following:
1. Procedures for aggregating the total balances of multiple
accounts in qualified state tuition programs established for a
designated beneficiary;
2. The establishment of a maximum total balance that may be
held in accounts for a designated beneficiary;
3. Requirements that persons who contribute to an account
certify that to the best of their knowledge the balance in all
qualified state tuition programs, as defined in 26 U.S.C., Section
529 of the Internal Revenue Code, of which the designated
beneficiary is the designated beneficiary does not exceed the lesser
of:
a. a maximum college savings amount established by the
Board from time to time, and
ENR. S. B. NO. 1989 Page 5
b. the cost in current dollars of qualified higher
education expenses that the contributor reasonably
anticipates the designated beneficiary will incur; and
4. Requirements that any excess balances with respect to a
designated beneficiary be promptly withdrawn in a nonqualified
withdrawal or transferred to another account of a family member or
rolled over to another family member beneficiary in accordance with
this section.
Q. The financial institution(s) shall make all reports and
informational returns as required by the Internal Revenue Service,
the Oklahoma Tax Commission, and other pertinent federal and state
laws and regulations.
R. The program manager shall make such reports with respect to
contributions, distributions, and other matters that the Board may
require pursuant to federal and state law reporting requirements.
The statement shall identify the contributions made during a
preceding twelve-month period, the total contributions made through
the end of the period, the value of the account as of the end of
this period, distributions made during this period, and any other
matters that the Board requires be reported to the account owner.
S. The State of Oklahoma, a local government of this state or
organizations described in 26 U.S.C., Section 501(c)(3) of the
Internal Revenue Code, may open and become the account owner of an
account to fund scholarships for persons whose identity will be
determined after an account is opened. Accounts established
pursuant to this section shall be exempt from the requirement that a
beneficiary be designated when an account is opened. Each person
who receives an interest in the account established pursuant to this
section in the form of a scholarship shall be considered a
designated beneficiary for the purposes of this act the Oklahoma
College Savings Plan Act.
SECTION 2. This act shall become effective November 1, 2026.
ENR. S. B. NO. 1989 Page 6
Passed the Senate the 19th day of February, 2026.
Presiding Officer of the Senate
Passed the House of Representatives the 6th day of May, 2026.
Presiding Officer of the House
of Representatives
OFFICE OF THE GOVERNOR
Received by the Office of the Governor this ____________________
day of ___________________, 20_______, at _______ o'clock _______ M.
By: _________________________________
Approved by the Governor of the State of Oklahoma this _________
day of ___________________, 20_______, at _______ o'clock _______ M.
_________________________________
Governor of the State of Oklahoma
OFFICE OF THE SECRETARY OF STATE
Received by the Office of the Secretary of State this __________
day of __________________, 20 _______, at _______ o'clock _______ M.
By: _________________________________