Most parents are concerned about saving for their kids’ college education, as costs continue to rise with no end in sight. Companies can offer a Section 529 college savings plan that acts much like a 401(k) plan, including automatic pretax payroll deductions. For plans with more than 200 employees, it’s common for the plan to be free. And there’s a proposal pending that would allow for a $600 pretax match.
It’s a free benefit without the high levels of liability and administrative cost found in qualified plans. Many companies are now using 529 plans — in a 2012 PlanSponsor Survey, for example, 15% of respondents with 401(k) plans said they offer a 529 as well. Like HSAs, 529 plans are another way for employers to help attract and retain good employees looking for help in saving for college. For advisors, it’s another way to distinguish themselves and their services.
