It can be tough to maintain a competitive edge in today’s crowded business environment. That’s why many business owners are looking for easy ways to make their benefit packages more desirable. To that end, many employers have found Ohio’s 529 Plan to be an effective benefit with desirable results.
More and more companies are looking for ways to invest in the overall financial wellness of their employees because of the long-term benefits associated with good financial health; an employer-sponsored 529 plan is an excellent way to support this objective. Not only does this option provide employees another savings option to put money away while incurring valuable tax incentives, it boasts limited administrative maintenance costs.
About Employer-Sponsored 529 Plans
Ohio’s CollegeAdvantage 529 Plan is designed to provide employees with a tax-advantaged way to save for higher education. Similar to a 401(k), 529 savings plans allow employees to put contributions in a mutual fund-based investment where the account value is based on investment performance. While contributions made into this fund will be made on an after-tax basis, when the time comes to withdraw the funds (as long as distributions are used for qualified higher education expenses) they will be tax-free. Furthermore, employees can use the tax-free funds to pay for their children’s education, their grandchildren’s education or even their own ongoing career development.
Employer-Sponsored 529 Plans boast the following benefits:
- More competitive benefits package – Companies that utilize this strategy effectively demonstrate concern for the financial well-being of the company’s employees, which results in happier employees, better job candidates and reduced turnover.
- Payroll direct deposit – While this step isn’t mandatory, some employers consider it as an added convenience for their employees. If an employee wants to utilize direct deposit it is their responsibility (not yours) to collect and present you with the direct deposit form.
- No extra costs or administrative burdens for employers – Employees are essentially responsible for opening and managing their account through the CollegeAdvantage website – not the employer.
Only you will know whether a particular benefit is right for your company and your employees. That being said, from our experience would be hard pressed to find another program that offers this much freedom and flexibility, powerful savings potential and limited-to-no administrative costs. Email Rea & Associates to learn more about Ohio’s 529 Plan and whether it makes sense for you and your business.
By Paul McEwan, CPA, MTax, AIFA (New Philadelphia Office)
Check out these great articles for more benefit plan insights:
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Retirement Plan Participants Are Content To Watch Their Savings Simmer