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Thinking outside the benefits box: 529 employer matches
Employer-sponsored retirement plans have long been an attractive benefit for employees. Typically, employers sweeten the appeal for participating by offering a matching percentage – say 5 percent of the worker’s wages. Benefits like these help attract top talent and retain quality employees, but for companies vying for the best of the best, it’s time to think outside the benefit box.
More companies are considering a new benefit: matching employee’s contributions to 529 college savings plans. Various 529 plans are available that allow people to save for tuition and associated college expenses for a specified beneficiary, such as yourself, your child or even a grandchild. Although taxed dollars fund these accounts, growth is tax-deferred and withdrawals are potentially tax-free.
On the surface, the 529 matches make sense. Just like a 401(k) match program encourages employees to save for retirement, a match of contributions to a qualified 529 plan motivates employees to save for education. Considering the sharp increase of college costs and the crushing amount of student debt in the U.S., this benefit is sure to resonate with current and future employees.
Implementing a 529 tax is a bold move for any company, and is definitely one worth tooting your own horn over. Not only does it show real commitment to your current staff and their family’s future, it also is a great way to attract new talent, especially in competitive industries.
Just imagine interviewing a great candidate, one you know multiple companies will want to hire. If he or she is torn between your company and another, it’s going to break down to salary, culture and benefits. If your benefits are bare-bones and another’s are brimming with not only traditional benefits, but also more unique benefits like 529 matches, the other guy is likely going to win.
Is it time for your business to consider a 529 match? That’s ultimately a long discussion that needs to weigh the numerous positives and negatives. But the bottom line is more employees are going to look for uncommon benefits that make working for a company even more attractive, especially the top notch candidates you really want on your team.