Casual Friday–529 plan basics

OK Policy focuses not just on budget and tax issues, but on finding ways for government and households to work together to make Oklahoma and Oklahomans more prosperous. One great example of this kind of partnership is 529 college savings plans. These state-managed savings plans are open to everybody who can come up with the $100 initial deposit. Savers can deduct their contributions to the account (up to $10,000 per year) from their Oklahoma state income taxes. If the account is used for qualified education purposes, all the money it earns over the years is exempt from both state and federal income taxes. So the federal and state government have established a system to encourage saving for college and to make it easier by managing the plans. Families just have to take advantage of this structure.

That’s easier said than done. In 2002, the last year for which we have data, only 4,420 Oklahoma tax returns–about 1/3 of one percent of all returns filed–reported contributions to a 529 plan.Most of those who did contribute were from higher income brackets; over half of all contributions were from families making $70,000 or more.

One of Oklahoma’s biggest needs is higher educational attainment. As the economy changes, college and technical education are more and more essential to family security and a growing economy. OK Policy is committed to making education more attainable and more effective. 529 plans are one path toward that goal. We can broaden participation by improving policy, but we also need to broaden awareness. Here’s a video  on starting a college savings plan by Tammy Trenta, whose credentials are led by being a contestant on The Apprentice. Still, it’s a good example of financial planning made simple, which will be one thing we have to do in order to open 529 participation up to all Oklahomans regardless of income and assets.


Paul Shinn

Paul Shinn served as Budget and Tax Senior Policy Analyst with OK Policy from May 2019 until December 2021. Before joining OK Policy, Shinn held budget and finance positions for the Oklahoma House of Representatives, the Department of Human Services, the cities of Oklahoma City and Del City and several local governments in his native Oregon. He also taught political science and public administration at the University of Oklahoma, University of Central Oklahoma, and California State University Stanislaus. While with the Government Finance Officers Association, Paul worked on consulting and research projects for the U.S. Environmental Protection Agency, the U.S. Department of Transportation, and several state agencies and local governments. He also served as policy analyst for CAP Tulsa. He holds a Ph.D. in Political Science from University of Oklahoma and degrees from the University of Oregon and the University of Maryland College Park. He lives in Oklahoma City with his wife Carmelita.

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