Do you have a group 529 plan?


A company-sponsored college savings plan can prove a recruiting asset.


Provided by Benedict A. Mitchell Jr.

A great complement to a 401(k). While businesses commonly sponsor qualified retirement plans, some firms have taken things a step further by offering 529 college savings plans to employees. At a time when many families are perplexed as to how to pay for college, this is a welcome move. It might even be a deciding factor in attracting and retaining top talent.

A plan that is simply administered. Many businesses arrange contributions to group 529 plans through simple payroll deduction. As employees are making after-tax contributions, these businesses don’t have to make W-2 adjustments. Businesses can add this perk at virtually no cost. Group 529 plans may be integrated into existing employee benefit packages, so that you can run everything through the same service interface. Employee education components can also be arranged.

If the company is large enough, some retirement plan vendors may allow employees to waive or reduce enrollment fees. Others will let employees invest in funds featuring load-waived A shares. (As A shares often have smaller fees and administrative expenses than other 529 share classes, waiving loads makes them even more attractive.)

A great way to build up college savings. A 529 plan offers tax-deferred growth, and the earnings are exempt from federal income taxes upon withdrawal - as long as the money goes to pay for qualified college expenses. The assets in a 529 account are treated as assets of the parent rather than assets of the student, so it is not a roadblock if the student pursues financial aid.1,2

If an employee really needs to build up college savings fast, it can be done. Each year, a taxpayer can contribute as much as the annual IRS gift exclusion will allow to a 529 account – currently, that is $13,000.3

While total contributions to a 529 plan can not exceed the amount needed to provide for the qualified education expenses of the student, anyone may contribute to the account in addition to the employee. No one is subject to contribution phase-outs or barriers due to high income. Additionally, anyone can be named as the account beneficiary - even the employee who enrolls in the plan!3

A signal that is really attractive. When a business sponsors a group 529 plan, it signals that it is one step ahead in recognizing the financial needs facing families, and it also communicates its belief in education and the promise of the next generation. With a group 529 plan, a prospective employee may see your company offering a great job and an answer when it comes to saving for a child’s education.



Benedict A. Mitchell Jr. is a registered representative of and offers securities through Kovack Securities, Inc., member FINRA / SIPC. Advisory services offered through Kovack Advisors, Inc., a Registered Investment Advisor. 3350 SW 3rd Ave. Ste. 204, Ft. Lauderdale, FL., 33315. Tel: (888) 236-9894 Ext 1. Florida Benefit Specialists is unaffiliated with Kovack Securities, Inc. and Kovack Advisors, Inc.


This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting Representative or the Representative’s Broker/Dealer. This information should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information..,,



1 – [8/6/07]

2 – [9/29/10]

3 –,,id=213043,00.html [1/14/10]