New College Savings Plan important to child’s future / An Editorial by Senate Education Committee Chairman Dolores Gresham

September 27, 2012 – We have often heard it said that “the world is getting smaller” and as it pertains to jobs, that is correct.   It is very important that our students get the skills they need to compete for the jobs of the future in a very competitive global market.   We have been working very hard over the past several years to ensure our students have the opportunities they need to meet these challenges.

The global marketplace has changed dramatically over the last two decades as  students from West Tennessee now not only compete with other Tennesseans or Americans, but with job seekers from around the world.  We must give our students more tools to succeed.  A college education is one of the best tools we can give them.  But, the price of education, like other services and commodities, is getting more and more expensive.  This makes it difficult for many families to save, plan, or pay for a college education for their children. 

Tennessee’s new Stars College Savings 529 Program offers parents a low-cost way to save for children’s college expenses with attractive investment options and special tax advantages.  It also gives friends and relatives an easy opportunity to share in that process. Parents, grandparents, aunts, uncles and friends can open accounts on behalf of children. 

The plan takes its name from Section 529 of the Internal Revenue Service Code, which authorized the creation of tax-advantaged plans in 1996.  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.
 
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.  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. The plan has 14 investment options and an age-based option covering a wide array of investment strategies to help parents make the most of early planning.  It is available to anyone regardless of income level.  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.

Investment in a child’s future through education savings is one of the best ways we can help a student achieve their dreams.  I hope we see many parents, grandparents and others participate in this new program. 

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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

 

Posted in News, Sen. Dolores Gresham
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