The Oklahoma College Savings Plan
The Oklahoma College Savings Plan is without a doubt one of the best ways for Oklahomans to save for a college education,” says Scott Meacham, State Treasurer of Oklahoma and the chairman of the board for the plan. “Your investment now in a college education today definitely pays off in the future.”
Meacham wants Oklahomans to be aware of the plan because it can be a valuable resource for families who are saving for college.
A 529 college savings plan is a type of investment account that allows families to set aside money for their children’s college education and enables it to grow tax-free. Any family is able to contribute to a 529 plan regardless of income, and these plans are very flexible.
The Oklahoma College Savings Plan (OCSP) is the only 529 plan in the state with an Oklahoma income tax deduction created specifically for helping Oklahoma families save for higher education expenses.
In addition, account holders have the choice of six investment options for those savings, and they will not be taxed on those savings when they use them to pay for college tuition, fees, books, supplies and required equipment.
In a 2007 survey conducted by MONEY magazine called “Find An A+ Savings Plan,” the Oklahoma College Savings Plan was one out of 22 plans selected as recommended for state residents out of 70 plans evaluated.
If you are already saving money for your child’s education, Meacham advises that parents switch to the OCSP. “Withdrawals used to pay for qualified higher education expenses are free from federal and Oklahoma income tax,” says Meacham.
In addition, unlike some other accounts, the account owner maintains total control of the money, enabling the parent to decide how much money to withdraw from the account and when.
Any U.S. citizen or resident alien can open an account in Oklahoma for a beneficiary, each requiring a valid social security number and citizenship. The minimum initial contribution is $100 per investment option and the minimum subsequent contribution to an account is $25 per investment option.
The amount contributed to the OCSP can be deducted from your Oklahoma taxable income up to a maximum of $10,000 per year. This is definitely one of the most attractive aspects of the plan, and is something families find beneficial.
According to Meacham, a question that some parents have is if the account must be used at an Oklahoma college or university. The money in your account may be used at any in-state or out-of-state eligible educational institution. Private and public universities, graduate and post-graduate schools, and community colleges are all included.
Another aspect of the OCSP is that if your child decides not to attend college, the account owner may simply name another beneficiary for the account. He or she must be a family member of the beneficiary that is being replaced.
However, if funds are withdrawn for any purpose other than college expenses, there is a 10 percent additional federal tax on the earnings portion of the non-qualified withdrawal.
What if your child receives an athletic or other scholarship? If the beneficiary receives a scholarship that covers the cost of qualified expenses, funds can be withdrawn from the account up to the amount of the scholarship without penalty or additional income tax.
“Most people who are considering college saving options want to know how much they should plan on saving, how many options they’ll have to invest that money within a 529 plan and what the tax advantages are with any given plan,” says Meacham.
Visit ok4saving.org or call 877-654-7284 to find the answers to all your questions about the Oklahoma College Savings Plan.
It’s easy to open an account. Simply enroll online on the Oklahoma College Savings Plan website and submit your initial contribution electronically from your bank account. Enrollment forms can also be downloaded from the website, or an enrollment kit can be mailed to your address at your request.