Update the reference to the Internal Revenue Code to reflect current federal law for the administration of higher education savings plans.
Summary
House Bill 1033 updates South Dakota’s statutory reference to the federal Internal Revenue Code for the state’s higher education savings program. The bill amends the definitions section of chapter 13-63 so that the term “Internal Revenue Code” means the U.S. Internal Revenue Code as of January 1, 2026, rather than an older fixed date. It also continues to incorporate federal definitions tied to section 529, including eligible education institutions, qualified higher education expenses, qualified tuition programs, family members, and rollover rules.
In practical terms, the bill is a conformity measure that keeps South Dakota’s college savings plan rules aligned with current federal tax law. By updating the reference date, the state preserves the intended tax treatment and administrative operation of 529 accounts under the state program, helping account owners, beneficiaries, financial institutions, and the South Dakota Investment Council rely on the most recent federal standards when contributions, distributions, and rollovers are handled.
Impact
The bill amends § 13-63-1, which governs definitions for South Dakota’s higher education savings program, and updates the incorporated federal law reference to the Internal Revenue Code effective January 1, 2026. This change affects administration of 529 college savings accounts by ensuring state law tracks current federal rules for contributions, qualified expenses, rollovers, and related account operations. It does not create a new program or alter the basic structure of the existing savings plan, but it reduces the risk of mismatch between state and federal tax treatment.
Sentiment
The available voting history shows unanimous support at each recorded stage, with all votes reported as do pass and no recorded nays. That suggests the bill was viewed as a routine technical update rather than a controversial policy change. The absence of committee transcript discussion also indicates little public disagreement or debate in the available record.
Contention
No notable points of contention appear in the provided materials. Because the bill is a technical conformity update to federal tax law, any potential concerns would likely center on whether the state should automatically align with future federal changes or maintain a fixed reference date, but no such objections are reflected in the votes or transcripts provided. The measure appears to have been broadly accepted by legislators and committee members.