Can an employer sponsor a 529 plan?
The IRS defines a 529 plan as a tool that makes it easier for people to save for educational costs on behalf of a beneficiary, such as a child or a grandchild. Anyone can make contributions to 529 college savings plans on behalf of the beneficiary, including parents, grandparents, uncles, aunts, and even employers.
Who are eligible family members for 529?
According to the IRS, a member of a 529 plan beneficiary’s family includes the beneficiary’s:
- Spouse.
- Son, daughter, stepchild, foster child, adopted child or a descendant.
- Son-in-law, daughter-in-law.
- Siblings or step-siblings.
- Brother-in-law, sister-in-law.
- Father-in-law, mother-in-law.
Can you contribute to 529 without children?
Yes, but the unborn child cannot be the beneficiary of the account. The IRS requires that a 529 account be opened for a living beneficiary who has a Social Security Number.
How much can an employer contribute to a 529 plan?
529 Plan Employer Tax Incentive 25% tax credit for 529 plan contributions; maximum $2,000 per year; beginning January 1, 2021. Matching contributions may not be used to pay for K-12 expenses.
Can an S Corp contribute to a 529 plan?
†——>I do NOT think so; 529 plan contributions are not directly related to your S corp business. There is no federal deduction for 529 contributions. Section 529 plans, which include college savings plans and prepaid tuition plans, offer several tax and nontax benefits.
How much can you add to a 529 per year?
529 plans do not have annual contribution limits. However, contributions to a 529 plan are considered completed gifts for federal tax purposes, and in 2019 up to $15,000 per donor, per beneficiary qualifies for the annual gift tax exclusion.
How does an employer contribute to a 529 plan?
With automatic payroll deposits, employees can set up regular contributions to their 529 accounts and not have to worry about forgetting to make a deposit or worse, spending the money elsewhere. And some employers are also offering matching contributions, which is basically free money to help pay for your child’s education.
Can you offer a 529 plan as a voluntary benefit?
Yes, you can offer a 529 plan to your employees as a voluntary benefit. In fact, including 529 plan in your benefits package can be a real bonus when it comes to attracting talent and retaining employees. According to a 2016 survey, 86% of respondents said they would participate in a 529 college savings plan if offered by their employer.
Are there any states that offer 529 plans?
Higher education is an essential part of a community’s future prosperity and economic mobility, which is why some states are encouraging employers to offer 529 plans. Nevada and Illinois currently offer employers a tax credit for matching employee 529 plan contributions.
Can a person open a 529 plan without an employer?
Just about anyone can open a 529 plan, even if it’s not offered through your employer. Most states offer a direct-sold plan, which you can sign up for online, or an advisor-sold plan, which has to be opened through a financial advisor.
Can a 529 plan be offered as an employee benefit?
All education savings plans are sponsored by state governments, but many do not have residency requirements, which means you can shop around for the most advantageous plan. Can I offer a 529 plan as an employee benefit?
Higher education is an essential part of a community’s future prosperity and economic mobility, which is why some states are encouraging employers to offer 529 plans. Nevada and Illinois currently offer employers a tax credit for matching employee 529 plan contributions.
Do you need an advisor to set up a 529 plan?
According to Savingforcollege.com’s 2016 Annual College Savings Survey, 72 percent of families who wanted to open a 529 plan said they don’t know the steps involved, and 36 percent said that they would enlist the help of a financial advisor to set up a plan.
How does an employer help with college planning?
A growing number of employers offer help with college planning for employees, their children and their grandchildren. College planning employee benefits include 529 plan selection, payroll deduction for 529 plan contributions and matching contributions.