While we strive to explain the Oklahoma 529 College Savings Plan (OCSP) in an easily accessible, straightforward manner — some legal language, investment terms, and acronyms still show up. And that can be a little overwhelming for anyone. So if you find yourself scratching your head, here’s a glossary for the unfamiliar terms you might encounter throughout the OCSP site.
An account in the Plan.
The account application is the application to be completed and submitted to the Oklahoma 529 College Savings Plan, along with payment, to participate in the Plan. It incorporates by reference the Plan Participation Agreement.
The account owner is the owner of an account in the Plan, typically the parent or grandparent but it doesn’t need to be a family relation.
An accredited school is a school that is eligible to participate in certain federal student aid programs. This might be a college or graduate school, or a vocational or trade school. Most major colleges and universities are accredited. Contact your school to determine if it is accredited.
An investment approach that seeks to exceed the average returns of the financial markets. Active managers rely on research, market forecasts, and their own judgment and experience in selecting securities to buy and sell.
A 10% additional federal tax imposed on the earnings portion of a Non-Qualified Withdrawal.
The distribution of your funds among various investment alternatives or asset classes. Typically, asset allocation is expressed in percentages; for example, 40% equities, 40% fixed income, 20% cash.
Different types of investments. Equities (stocks), fixed-income (bonds) and money market (short-term investments) are examples of asset classes.
A fund that seeks both growth and income, with stability of principal, through a portfolio that includes both stocks and bonds.
The beneficiary is the student. The person named by the account owner in the account application. This is the student who will be using the funds.
A bond is a type of debt security in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. A collection or grouping of financial bonds is known as a bond portfolio.
The market value of a company’s outstanding securities, excluding current liabilities. Under $3 billion is generally considered small-cap; $2 - $10 billion is mid-cap; and over $8 billion is large-cap.
Coverdell Education Savings Account (CESA or ESA)
A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the designated beneficiary of the account. It may be used to save for K-12 and higher education expenses and limits contributions to $2,000 per year per child. Household income limitations may apply.
An account that is created for the benefit of a minor, with an adult (agent, bank, trust company, or other organization) as the custodian in accordance with applicable state law. With custodial accounts, control of the account transfers to the beneficiary at the age of majority (18 or 21 depending on state).
Custodial Account Application
This is an account application used by a custodian. Download the Custodial Account application.
An agent, bank, trust company, or other organization which holds and safeguards an individual’s account assets for him.
There are no glossary terms that begin with the letter "D"
EGTRRA is the Economic Growth and Tax Relief Reconciliation Act of 2001, as amended, and the Treasury regulations, pronouncements and publications thereunder.
Eligible Educational Institutions
Generally are accredited Title IV, post-secondary educational institutions offering credit towards a bachelor’s degree, an associate’s degree, a graduate level or professional degree, or another recognized post-secondary credential.
Entity Account Application
This is the account application used by trusts or estates, business entities, Internal Revenue Code Section 501(c)(3) organizations, or state/local governments. Download the Entity Account application.
Also called stocks. A security representing ownership rights in a company. A stockholder is entitled to share in the company’s profits, some of which may be paid out as dividends. A collection or grouping of financial equities is known as an equity portfolio.
A ‘member of the family’ of a beneficiary is a person related to that beneficiary as follows: (i) a son or daughter, or a descendant of either; (ii) a stepson or stepdaughter; (iii) a brother, sister, stepbrother or stepsister; (iv) the father or mother, or an ancestor of either; (v) a stepfather or stepmother; (vi) a son or daughter of a brother or sister; (vii) a brother or sister of the father or mother; (viii) a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law; (ix) the spouse of the beneficiary or of any of the other foregoing individuals; or (x) a first cousin of the beneficiary. For this purpose, a child includes a legally adopted child and a brother or sister includes a half-brother or half-sister.
Also called bonds. Essentially, these are loans that you make to a government or corporation (called the issuer) when it needs to raise the cash. They have a maturity date, which is the date the issuer is obligated to repay you the principal, or face amount, of the bond. Bonds also generally pay you interest until their maturity date. A collection or grouping of financial bonds is known as a bond portfolio.
A mutual fund that generally invests in stocks of companies believed to have above-average potential for growth in revenue and earnings. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value.
High Yield Bond
A bond that has a rating of BB or lower and that pays a higher yield to compensate for its greater risk. Also known as junk bonds.
A passively-managed mutual fund that seeks to match the performance of a particular market index.
Individual Account Application
This is the account application typically used by an individual (parent, grandparent, family member or friend) to create an account for the student. Download the Individual Account application.
Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments-unlike those of conventional bonds-are adjusted over time to reflect inflation.
International Stock Fund
A mutual fund that invests in the stock of companies located outside of the United States.
The Plan investment options in which you may invest your contributions.
Individual Retirement Account — A tax-deferred or tax-free retirement account established by an individual that permits the individual to set aside up to a certain amount per year, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later, or in the case of a Roth IRA, are tax-free on withdrawal. See a tax advisor for more detailed information.
The Internal Revenue Service is the nation’s tax collection agency and administers the Internal Revenue Code enacted by Congress.
There are no glossary terms that begin with the letter "J"
A special tax law for children under 17 years old who have earned income that is in excess of an annually determined threshold. Extra income beyond this threshold becomes taxable at the guardian’s rate.
There are no glossary terms that begin with the letter "L"
Medallion Signature Guarantee
Available from many domestic banks, trust companies, credit unions, and other financial institutions, this is a special signature guarantee that ensures the authenticity of a signature for the transfer of a security.
Money Market Fund
A mutual fund designed to provide safety of principal and current income by investing in securities that mature in one year or less, such as bank certificates of deposit, commercial paper and U.S. Treasury bills. Money market funds seek to maintain a stable $1 net asset value. Money market funds have the lowest risk of any type of mutual fund, but may offer the lowest potential for gains.
A diversified, professionally managed portfolio of securities that pools the assets of individuals and organizations to invest toward a common objective such as current income or long-term growth.
Net Asset Value (NAV)
The market value of a mutual fund’s total assets, minus liabilities, divided by the number of shares outstanding. The value of a single share is also called its share value or share price.
There are no glossary terms that begin with the letter "O"
A low-cost investment strategy in which a mutual fund attempts to match — rather than outperform — a particular stock or bond market index; also known as indexing.
The Plan is the Oklahoma 529 College Savings Plan.
The plan manager is the person or entity that the State engages to provide administrative and other services for the plan. The Oklahoma 529 College Savings Plan manager is TIAA-CREF Tuition Financing, Inc. (TFI).
A collection of financial investments such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts held by an investment company, hedge fund, or individual.
Qualified Higher Education Expenses
Qualified higher education expenses include tuition, fees, and the cost of books, supplies, and equipment required for the enrollment and attendance of the beneficiary at an eligible educational institution, as well as certain room and board expenses. Computers and related technology such as internet access fees, software or printers are also qualified education expenses. The student must be the primary user of the equipment. Qualified Higher Education Expenses also include tuition in connection with enrollment or attendance at a K-12 public, private or religious school, up to a maximum of $10,000 per year per Beneficiary from all Section 529 plans. State tax treatment of withdrawals for K-12 tuition expense is determined by the state where you file state income tax. If you are not a Kentucky taxpayer, please consult with a tax advisor.
Qualified higher education expenses also include certain additional enrollment and attendant costs of a beneficiary who is a special needs beneficiary in connection with the beneficiary’s enrollment or attendance at an eligible institution. For this purpose, an eligible educational institution generally includes accredited postsecondary educational institutions offering credit toward a bachelor’s degree, an associate’s degree, a graduate-level degree or professional degree, or another recognized postsecondary credential.
Any withdrawal from an Account used to pay for the Qualified Education Expenses of the Beneficiary at an Eligible Educational Institution.
A tax-free reinvestment from one qualified plan to another within a specific time frame, usually 60 days. You are permitted to transfer funds from another 529 college savings plan to an account in the Oklahoma 529 College Savings Plan for the same beneficiary once within a 12-month period without incurring federal income tax. The 529 college savings plan from which you are transferring funds may be subject to differences in features, costs and surrender charges. You should consult with your tax advisor or the other 529 college savings plan. State and local taxes may apply.
Section 529 of the Internal Revenue Service Code, the section that specifies the requirements for qualified tuition college savings programs (529 plans).
The general name used to describe stocks, government obligations, corporate bonds, or ownership rights, such as options or futures.
Successor Account Owner
The Successor Account Owner is the person designated by the account owner on the account application to succeed to ownership of the account upon the account owner’s death.
Any withdrawal from an Account that is: (1) paid to a beneficiary of, or the estate of, the Beneficiary on or after the Beneficiary’s death or attributable to the permanent disability of the Beneficiary; (2) made on account of the receipt by the Beneficiary of a scholarship award or veterans' or other nontaxable educational assistance (other than gifts or inheritances), but only to the extent of such scholarship or assistance; (3) made on account of the Beneficiary’s attendance at a military academy, but only to the extent of the costs of education attributable to such attendance; or (4) equal to the amount of the Beneficiary’s relevant Qualified Higher Education Expenses that is taken into account in determining the Beneficiary’s Hope Scholarship/American Opportunity Credit or Lifetime Learning Credit.
TIAA-CREF Tuition Financing, Inc.
TIAA-CREF Tuition Financing, Inc., (TFI) is an affiliate of TIAA, a financial services organization with more than 90 years of investment experience.
Title IV Participation
Institution has a Program Participation Agreement with the US Department of Education (the Department) for eligible students to receive Pell Grants and, depending upon the agreement, other federal aid. For an institution to participate in Title IV financial aid programs, it must offer a program of at least 300 clock hours in length, have accreditation recognized by the US Department of Education, have been in business for at least 2 years, and have signed a participation agreement with the Department.
A percentage change, over a specified time period, in a mutual fund’s net asset value, adjusted to reflect the reinvestment of all dividend and capital gain distributions.
Uniform Gift to Minors Act. Laws adopted by most states allowing an adult to contribute to a custodial account in a minor’s name without having to establish a trust or name a legal guardian. Thus, minors can have securities bought and money invested in their names, but the custodian is responsible for managing the funds in the account. The custodian has a fiduciary duty to manage the account prudently, but once the minor reaches the age of majority, he/she has complete rights to the funds in the account. The assets are the legal property of the minor, and the parent has no legal control over the uses of the proceeds of the account. All withdrawals from the account are taxed at the minor’s rate. Putting money into a UGMA account can negatively impact the chances for financial aid, since financial aid officers may weigh children’s assets more heavily than parents’ assets.
An ownership interest in an Investment Option that is purchased by making a contribution to an Account.
Uniform Transfers to Minors Act. Law which extends the Uniform Gift to Minors Act’s definition of a gift to include real estate, fine art, patents and royalties.
There are no glossary terms that begin with the letter "V"
There are no glossary terms that begin with the letter "W"
There are no glossary terms that begin with the letter "X"
There are no glossary terms that begin with the letter "Y"
There are no glossary terms that begin with the letter "Z"
An IRS form an individual receives during the tax season if withdrawals were made from a 529 or Coverdell Education Savings Account (ESA) during the previous year. The form is used by the individual to fill out both federal and state tax returns.