Tennessee TNStars 529 College Savings Program

If you are thinking about saving for college, you may want to consider Tennessee's 529 College Savings program, TNStars.

The TNStars College Savings program is Tennessee’s 529 plan. It provides families with high-quality investment options at a low cost to help them save for higher education expenses. Families can invest directly with the program, and funds can be withdrawn tax-free to pay for qualified education expenses like tuition, room and board, books, and computers. Research shows that children with school savings are more than three times more likely to enroll in college and four times more likely to graduate than children without savings.

The TNStars College Savings 529 Program is administered by the Tennessee Department of Treasury. It is a direct-sold multi-manager 529 college savings plan open to all Tennesseans. TNStars has an annual contribution limit of $15,000. Investments in the plans are not federally insured or guaranteed by the state of Tennessee, and there is a risk of investment loss. Tennessee residents may also consider other state 529 plans offering tax or other benefits unavailable through TNStars.

In celebration of September being College Savings Month, TNStars is incentivizing Tennesseans to start or increase their recurring contributions. Sept. 1 through Oct. 31, new or existing TNStars account owners who start a recurring contribution of $25 or more will receive a one-time bonus of $25 in their TNStars account.

Tax Benefits of Tennessee TNStars College Savings Program

Tax Benefits of Tennessee TNStars College Savings Program

The TNStars College Savings Program offers a significant tax benefit through tax-free growth on contributions used for qualified education expenses.

Tax-Free Growth: Any earnings your contributions generate within the TNStars account grow tax-free. This means you don’t pay capital gains taxes on investment growth as long as the money is used for qualified education expenses.

Tax-Free Withdrawals: The entire amount is tax-free when you withdraw funds from your TNStars account to pay for qualified education expenses. This includes both your original contributions and the tax-free earnings.

Qualified Education Expenses: Withdrawals must be used for qualified education expenses to qualify for tax-free treatment. These expenses typically include tuition, fees, room and board, books, and supplies at eligible institutions. Examples of eligible institutions include accredited colleges, universities, vocational schools, and certain apprenticeship programs.

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