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1 STATE OF OKLAHOMA
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2 2nd Session of the 60th Legislature (2026)
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3 SENATE BILL 1989 By: Nice
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6 AS INTRODUCED
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7 An Act relating to the Oklahoma College Savings Plan;
7 amending 70 O.S. 2021, Section 3970.7, which relates
8 to operation through use of accounts; expanding
8 options for making contributions to accounts;
9 updating statutory language; updating statutory
9 reference; and providing an effective date.
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12 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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13 SECTION 1. AMENDATORY 70 O.S. 2021, Section 3970.7, is
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14 amended to read as follows:
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15 Section 3970.7. A. The program shall be operated through the
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16 use of accounts. An account may be opened by any person who desires
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17 to save to pay the qualified higher education expenses of a person
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18 by:
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19 1. Completing an application in the form prescribed by the
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20 Board;
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21 2. Paying the one-time application fee established by the
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22 Board;
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23 3. Making the minimum contribution required by the Board or by
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24 opening an account; and
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1 4. Designating the type of account to be opened if more than
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2 one type of account is offered.
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3 B. Any person may make contributions to an account after the
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4 account is opened.
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5 C. Contributions to accounts may be made only in cash or by the
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6 use of digital peer-to-peer payment networks and digital payment
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7 networks.
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8 D. Account owners may withdraw all or part of the balance from
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9 an account on sixty (60) days' notice, or a shorter period as may be
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10 authorized by the Board, under rules prescribed by the Board. These
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11 rules shall include provisions that will generally enable the Board
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12 or program manager to determine if a withdrawal is a nonqualified
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13 withdrawal or a qualified withdrawal. The rules may, but need not,
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14 require one or more of the following:
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15 1. Account owners seeking to make a qualified withdrawal or
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16 other withdrawal that is not a nonqualified withdrawal shall provide
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17 certifications, copies of bills for qualified higher education
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18 expenses or other supporting material;
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19 2. Qualified withdrawals from an account shall be made only by
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20 a check payable jointly to the designated beneficiary and a higher
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21 education institution; or
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22 3. Withdrawals not meeting certain requirements shall be
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23 treated as nonqualified withdrawals by the program manager.
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1 E. An account owner may change the designated beneficiary of an
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2 account to an individual who is a member of the family of the former
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3 designated beneficiary in accordance with procedures established by
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4 the Board.
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5 F. An account owner may make the following changes and
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6 transfers relating to the account:
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7 1. Change the beneficiary of the account;
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8 2. Transfer funds between accounts; and
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9 3. Transfer funds between an account and an account in a
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10 qualified tuition program in another state or make a deposit to a
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11 new or existing account or to an account in a qualified tuition
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12 program in another state.
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13 The account owner shall be informed that certain tax
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14 consequences may apply to these changes.
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15 G. An account owner may make the changes, transfers, and
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16 withdrawals described in subsection F of this section to an account
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17 that is owned by the account owner. The account owner may also make
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18 transfers to an account that is owned by another person. If a
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19 change of beneficiary or transfer causes the total account balance
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20 for all accounts under the program for the new beneficiary to exceed
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21 the maximum account balance limit, the excess amount shall be
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22 rejected and returned to the account owner.
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23 H. In the case of any nonqualified withdrawal from an account,
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24 an amount of not more than five percent (5%) of the proposed
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1 withdrawal may be withheld as a penalty and paid to the Board for
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2 use in operating and marketing the program and for state student
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3 financial aid.
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4 I. The Board may set the percentage of the penalty prescribed
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5 in subsection H of this section or change the basis of this penalty
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6 if the Board determines that establishing a penalty or raising an
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7 existing penalty is needed to discourage nonqualified withdrawals.
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8 J. If an account owner makes a nonqualified withdrawal and no
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9 penalty amount is withheld pursuant to subsection H of this section
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10 or the amount withheld was less than the amount required to be
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11 withheld under that subsection for nonqualified withdrawals, the
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12 account owner shall pay the unpaid portion of the penalty to the
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13 Board on or before April 15 of the following tax year.
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14 K. Each account for each designated beneficiary shall be
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15 maintained separately from each other account under the program.
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16 L. Separate records and accounting shall be maintained for each
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17 account for each designated beneficiary.
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18 M. Except as permitted by 26 U.S.C., Section 529 of the
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19 Internal Revenue Code, no contributor to, account owner of, or
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20 designated beneficiary of any account may directly or indirectly
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21 direct the investment of any contributions to an account or the
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22 earnings from the account.
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23 N. If the Board terminates the authority of a financial
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24 institution to hold accounts and accounts must be moved from that
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1 financial institution to another financial institution, the Board
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2 shall select the financial institution and type of investment to
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3 which the balance of the account is moved unless the Internal
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4 Revenue Service provides guidance stating that allowing the account
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5 owner to select among several financial institutions that are then
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6 contractors would not cause a plan to cease to be a qualified state
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7 tuition plan.
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8 O. Neither an account owner nor a designated beneficiary may
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9 use an interest in an account as security for a loan. Any pledge of
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10 an interest in an account is of no force and effect.
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11 P. The Board shall adopt guidelines and procedures to prevent
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12 contributions on behalf of a designated beneficiary in excess of
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13 those necessary to pay the qualified higher education expenses of
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14 the designated beneficiaries. The guidelines may address the
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15 following:
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16 1. Procedures for aggregating the total balances of multiple
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17 accounts in qualified state tuition programs established for a
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18 designated beneficiary;
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19 2. The establishment of a maximum total balance that may be
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20 held in accounts for a designated beneficiary;
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21 3. Requirements that persons who contribute to an account
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22 certify that to the best of their knowledge the balance in all
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23 qualified state tuition programs, as defined in 26 U.S.C., Section
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24 529 of the Internal Revenue Code, of which the designated
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1 beneficiary is the designated beneficiary does not exceed the lesser
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2 of:
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3 a. a maximum college savings amount established by the
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4 Board from time to time, and
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5 b. the cost in current dollars of qualified higher
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6 education expenses that the contributor reasonably
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7 anticipates the designated beneficiary will incur; and
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8 4. Requirements that any excess balances with respect to a
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9 designated beneficiary be promptly withdrawn in a nonqualified
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10 withdrawal or transferred to another account of a family member or
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11 rolled over to another family member beneficiary in accordance with
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12 this section.
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13 Q. The financial institution(s) shall make all reports and
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14 informational returns as required by the Internal Revenue Service,
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15 the Oklahoma Tax Commission, and other pertinent federal and state
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16 laws and regulations.
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17 R. The program manager shall make such reports with respect to
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18 contributions, distributions, and other matters that the Board may
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19 require pursuant to federal and state law reporting requirements.
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20 The statement shall identify the contributions made during a
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21 preceding twelve-month period, the total contributions made through
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22 the end of the period, the value of the account as of the end of
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23 this period, distributions made during this period, and any other
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24 matters that the Board requires be reported to the account owner.
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1 S. The State of Oklahoma, a local government of this state or
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2 organizations described in 26 U.S.C., Section 501(c)(3) of the
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3 Internal Revenue Code, may open and become the account owner of an
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4 account to fund scholarships for persons whose identity will be
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5 determined after an account is opened. Accounts established
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6 pursuant to this section shall be exempt from the requirement that a
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7 beneficiary be designated when an account is opened. Each person
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8 who receives an interest in the account established pursuant to this
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9 section in the form of a scholarship shall be considered a
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10 designated beneficiary for the purposes of this act the Oklahoma
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11 College Savings Plan Act.
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12 SECTION 2. This act shall become effective November 1, 2026.
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14 60-2-2660 QD 1/15/2026 9:37:39 AM
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Req. No. 2660 Page 7Every fact on this page links to its source, starting with the official bill record.