A. A part of the salary, not to exceed the limitations on deferrals provided in Section 403(b) of the Internal Revenue Code of 1986, as amended, payable to a teacher or employee by a school district may, at the election of such teacher or employee, be deferred for the investment in an annuity contract from any insurance company authorized to do business in Oklahoma or by the investment in shares of regulated investment companies to be held in a custodial account as authorized by Section 403(b)(7) of the Internal Revenue Code of 1986, as amended, or by the investment in a face amount investment annuity certificate issued by a company authorized to do business in Oklahoma by the district for the teacher or employee, provided that such teacher or employee is eligible to defer a portion of their salary under the terms of the school district's 403(b) plan; and the teacher or employee shall be entitled to have such annuity contract, custodial account or face amount investment annuity certificate continued in force in succeeding years by such school district or any other school district subsequently employing the teacher. Provided, that such amounts contributed or paid by a school district must be made to vendors approved by such school district as eligible to receive the elective deferrals. Provided further, that a school district may revoke a previously approved vendor’s eligibility to receive elective deferrals, thereby prohibiting future contributions or payments to such vendor until it regains its eligibility through subsequent approval from such school district. The amounts so contributed or paid by the school district for the annuity contract, custodial account or face amount investment annuity certificate, or to continue it in force, shall be considered as payment of salary, for the same amounts, to the teacher or employee for State Aid purposes, Teachers' Retirement System purposes, or Social Security purposes, but not for state income tax purposes. Provided that the amount received under such annuity contracts, custodial accounts or face amount investment annuity certificates shall be income subject to state income tax when actually received, unless otherwise exempt from income tax.

B. The provisions of subsection A of this section shall also apply to employees of institutions, agencies and boards comprising The Oklahoma State System of Higher Education who are eligible to defer a portion of their salary under the terms of such institution, agency or board's 403(b) plan. Such institutions, agencies and boards may purchase annuity contracts, custodial accounts or face amount investment annuity certificates from vendors approved by such institution, agency or board as eligible to receive such contributions or payments, provided that such vendor is:

1. An insurance company authorized to do business in Oklahoma;

2. A life insurance or annuity company organized and operated, without profit to any private shareholder or individual, exclusively for the purpose of aiding and strengthening educational institutions by issuing insurance and annuity contracts only to or for the benefit of such institutions and individuals engaged in the services of such institutions; or

3. A broker dealer licensed to sell shares of regulated investment companies to be held in custodial accounts as authorized by Section 403(b)(7) of the Internal Revenue Code of 1986, as amended.

Provided further, that an institution, agency or board may revoke a previously approved vendor’s eligibility to receive elective deferrals, thereby prohibiting future contributions or payments to such vendor until it regains its eligibility through subsequent approval from such institution, agency or board.

Added by Laws 1971, c. 281, § 6-102, eff. July 2, 1971. Amended by Laws 1972, c. 64, § 1, emerg. eff. March 28, 1972; Laws 1972, c. 205, § 1, emerg. eff. April 7, 1972; Laws 1987, c. 62, § 1, emerg. eff. May 4, 1987. Renumbered from Title 70, § 6-102 by Laws 1989, 1st Ex.Sess. c. 2, § 116, operative July 1, 1990. Amended by Laws 2008, c. 327, § 1, eff. July 1, 2008.