Governor Bill Haslam and Tennessee Treasurer David H. Lillard, Jr. say Tennessee needs a highly-educated workforce to continue to attract businesses that bring new jobs to the state. So earlier today, Treasurer Lillard and Governor Haslam, along with Lt.
Governor Ron Ramsey and House Speaker Beth Harwell, introduced the Tennessee Stars College
Savings 529 Program, which is a tool that can help more Tennesseans get the college education they will
need to succeed in a highly-competitive job market. The program offers family and friends a low-cost
way to save for children’s college expenses with attractive investment options and special tax
advantages.
Treasurer Lillard and Governor Haslam announced the new program in front of a crowd of children,
parents and grandparents at the Adventure Science Center Planetarium in Nashville. Some of the
attendees immediately signed up for the program at the event.
“In a competitive global economy, it is imperative that Tennessee children have access to higher
education and develop a strong set of skills to help transition into the workforce. The Tennessee Stars
College Savings 529 Program makes college savings cost effective, easy and relatively inexpensive,
with a range of investment options,” said Treasurer Lillard.
“This is a great opportunity for Tennesseans who want to attend college,” Governor Haslam said.
“College is not for everyone, but it needs to be for more Tennesseans if we’re going to compete for jobs
in today’s market. This program will help increase student accessibility to a college education as we
work to grow and recruit businesses to Tennessee.”
– more –
The Tennessee Stars College Savings 529 Program is a tax-advantaged college savings plan that is
designed to help Tennessee parents, grandparents and friends support the educational needs of loved
ones. The plan takes its name from Section 529 of the Internal Revenue Service Code, which authorized
the creation of tax-advantaged plans in 1996.
To encourage enrollment in the program, the Tennessee Department of Treasury is offering financial
incentives to any Tennessee residents interested in opening accounts. Tennesseans who open accounts
with at least $50 will each receive a one-time $50 match from the state. Tennesseans who roll over their
entire account balances from other 529 college savings plans, including the state’s prepaid plan, will
each receive $100.
There are many benefits to investing with Tennessee Stars College Savings 529 Program. The plan is
available to everyone and the investment returns on savings are tax free as long as they are used for
approved education-related expenses. The money saved may be applied to higher education, including
public or private colleges and universities inside or outside the state of Tennessee as well as any other
educational entities eligible to receive federal student loan funds, such as Tennessee technology centers.
Benefits of Tennessee Stars include:
• Low fees that will be on par with the top-rated plans in the nation;
• 14 investment options and an age-based option covering a wide array of investment strategies;
• Federal tax-free earnings if the money is used for higher education expenses;
• Availability to anyone regardless of income level. Parents, grandparents, aunts, uncles and
friends can open accounts on behalf of children;
• Contributions qualify for a $13,000 annual federal gift tax exclusion. Also, a lump sum of
$65,000 may be contributed to a 529 plan and treated as if it were made over a five-year period
to completely avoid the federal gift tax; and
• Plan contributions aren’t considered to be a part of an estate for federal tax purposes. Account
owners still retain control of the accounts, but do not pay federal estate taxes on the value of the
accounts. But if a gift is spread over five years and the account owner passes away within the
five years, a portion of the gift will be included in the estate.
Participants have control over how they manage their investments with the Tennessee Stars College
Savings 529 Program. The plan offers an age-based option in which investments are more aggressive
when children are young and then become more conservative as the children approach college age. The
plan also offers individual investment options, including domestic and international equities, balanced
fund options, fixed income options, and an FDIC-insured option. The underlying investments for the
plan will be offered from more than one fund company.
“We’ve worked to make sure that saving for college with the Tennessee Stars College Savings 529
Program is easy. Tennessee, this plan is for you. It has been designed by Tennesseans. It is managed by
Tennesseans. And, if you call with a question, you’ll be speaking with Tennesseans,” said Treasurer
Lillard.
– more –
Anyone interested in opening an account with the Tennessee Stars College Savings 529 Program can
learn more by visiting www.TNStars.com or by calling (855) 386-7827 toll-free.
Businesses are also encouraged to make it easier for their employees to save by offering payroll
deductions to the program.. Any business interested in offering payroll deductions can learn more by
visiting www.TNStars.com or by calling (855) 386-7827 toll-free.
“We have a strong business community in Tennessee and business owners and human resource
professionals can offer college savings through the Tennessee Stars College Savings 529 Program as a
payroll deduction option for each of their employees,” said Governor Haslam.
