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4 Tips for How to Set Up a 529 Plan to Benefit Your Business

529 education savings plans allow families to put away money for their children’s education without paying taxes on the earnings, as long as the withdrawals are used for qualified educational expenses and fall within the applicable annual limits. While many people may already have these set up for their children or grandchildren, they also make a great benefit option to offer employees as a way to attract potential employees and keep the loyalty of those you have. If you think a 529 savings plan might be a good benefits plan for your business, here are a few tips to consider when setting one up.1

1. Talk to Your Employees

If you are thinking of adding a 529 education savings plan to your employee benefits, get your employees’ feedback. See if they are interested and how many may be interested to see if it is worth setting up. Be sure to discuss the advantages, what the fund is used for, and the limitations.2

2. Consider an Employer Match

While employer matching is not required, it may make the benefit much more enticing and likely qualify for the annual federal gift exclusion, which may mean a nice tax break for the company. It may help each employee’s funds grow quickly. Be sure to talk with your accountant or tax professional, as the federal gift tax with 529 plans may be a little complicated to understand 2

3. Determine the Max Contribution for Match

If you decide to do an employer match for your employee’s 529 education savings plan, you must determine what maximum limit you will match an employee’s contribution. You may do this as a specific amount, though it is often done as a percentage, such as with a 401(k) match. You may want to determine how much you can comfortably afford to match and set a limit before implementing the program.2

4. Streamline the Process By Integrating Contributions With Your Payroll

While you want to provide your employees with more benefits, you don’t want to add more work to your plate. So, one way to do this is by streamlining the contribution process to work with your payroll. Many payroll platforms allow you to sync contributions for 401(k)s and other sites with your regular payroll runs, making everything more seamless and less time-consuming.

Help your employees get a start on their children’s educational future and make your benefits more attractive to potential employees by adding a 529 education savings plan to your employee benefits package.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 552909

Footnotes

1 How a 529 Savings Plan Can Give Your Business a Serious Edge
https://gusto.com/resources/articles/benefits/529-college-savings-plan-employee-benefit

2 Voluntary Benefit
https://www.collegeinvest.org/employers/voluntary-benefits/

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