529 plans help employees close the education savings gap | EBA – News on employee benefits | Team Cansler

In recent years, the benefits landscape has changed dramatically as companies responded to the changing needs of their workforce during the COVID-19 pandemic. In today’s economy, building an authentic culture of care is more important than ever. The strategic development of benefit options can help companies to optimally position themselves as an attractive employer and to retain today’s employees, who increasingly prefer companies that care about their employees and do the right thing for them.

For performance professionals looking beyond COVID-19, the next frontier for employee wellness is educational support. Within this category, the 529 Education Savings Plan is an inexpensive and easy-to-implement voluntary retirement option.

For employees, these plans can be essential. The cost of education in the United States continues to rise dramatically. That “All-in” costs a year at a private college currently costs $55,800, while a student at a public college can expect $27,730 a year, the College Board notes. The fight to fund higher education has been pushed further into the spotlight by President Biden student loans forgiveness program.

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As with a 401(k) plan, regular or even small contributions to a tax-deferred 529 education savings account can potentially add up significantly over time. This offers a tremendous opportunity build funds to cover the exploding costs of education. These plans aren’t just for traditional college students. You can help fund K-12 tuition, technical and vocational school programs, apprenticeship programs, graduate schools and more. They can even be used to repay up to $10,000 of the beneficiary’s student loans.

Implementing a 529 plan as a voluntary benefit is one way for employers to reduce the financial stress of saving education expenses. These plans are particularly attractive as a performance option because they’re usually free or low-cost and easy to implement. Most of the administrative work is performed by a plan administrator. Employers are generally only responsible for communicating details of benefits to their employees and taking steps to ensure benefits are understood and accepted. The 529 plan does the rest.

Once a 529 savings plan option is in place, employees can enroll, choose from a menu of investment options, and make direct contributions to their 529 plan accounts through regular salary payments. Money in the 529 Plan grows tax-deferred, earns interest over time, and qualifying withdrawals are tax-free.

As with any new benefit offer, it needs to be maintained. The rollout strategy should ideally include training, workshops, and tactics that help spread the word through internal communication channels. The plan administrator can assist a company’s human resources department in planning for adoption by promoting financial literacy and ongoing educational initiativesand hosting informational events and providing enrollment assistance.

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Continued support from employers is crucial. Running seasonal campaigns, for example, can help tie the benefits of a 529 plan to specific themes—from “back to school” in September to “year-end financial and tax planning” in November and December. Employers can also help publicize a 529 benefit by making direct contributions as a form of employee recognition or by encouraging participation through a tailored matching program.

Given that 529 plans are generally sponsored by individual states, employers in several states might be reluctant to adopt a 529 plan for fear of complexity. However, some plan administrators may offer 529 plans in multiple states, and there are online resources that give out-of-state employees the flexibility to find and select multiple plans.

By adopting a 529 plan as a voluntary benefit, employers can help their employees take control of one of life’s biggest financial challenges, funding education, while adding a new feature to their recruiting toolkit. This move, in turn, can help attract and retain top talent at a time when demonstrating a culture of caring is most important.

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