Employer-sponsored 529 (e529)**

Save through payroll deduction

As 529 plans grow in popularity, companies are beginning to offer employer-sponsored 529 plans as part of their employee benefits packages. However, the term “employer-sponsored 529 plan” is somewhat misleading. A 529 plan itself is not sponsored by the employer, rather it is the means of contribution (automatic payroll deduction) that is sponsored. Having your 529 contributions automatically deducted from your paycheck is one way to make it easier to save for college. With this type of forced savings, you don’t “miss” the money and won’t be tempted to spend it on something else.

Once enrolled in an employer-sponsored 529 plan, your account works just as if you had opened an individual 529 plan account. However, unlike the process of opening an account on your own – where you have an unlimited number of plans to choose from – your participation in an employer-sponsored 529 plan is limited to the 529 plan(s) that your employer has selected.

It’s important to do some research before enrolling in your employer’s plan. Check the types of investment choices that are offered by the plan. Is there a broad range of investments to choose from? Also find out if there are any plan restrictions such as requirements for a child to attend college in state or required fees. Most importantly, if your employer offers only 529 plans that are sponsored out of state, find out if you’ll be missing out on any state tax benefits available if you were to contribute to your own state’s 529 plan, e.g., a state income tax deduction for contributions.

If your employer doesn’t offer a 529 plan or if you are unsatisfied with the plan(s) that your employer offers, you can still save in a 529 plan by opening an account on your own.

For more information, answers to questions about employee sponsored 529 plans or to ask how an employee sponsored 529 plan can fit into your  investment strategy please contact a CFS Financial Advisor at Denali today.

*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/ SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The credit union has contracted with CFS to make non-deposit investment products and services available to credit union members.

For specific tax advice, please consult a tax professional.

Financial Advisors are registered to conduct securities business and licensed to conduct insurance business in limited states. Response to, or contact with, residents of other states will be made only upon compliance with applicable licensing and registration requirements. The information in this website is for U.S. residents only and does not constitute an offer to sell, or a solicitation of an offer to purchase brokerage services to persons outside of the United States.

**There are fees associated with 529 savings plans.  Investments in 529s involve investment risks.  You should consider your financial needs, goals, and risk tolerance prior to investing. More information about 529 plans can be found in the issuer’s official statement or plan disclosure document which should be read carefully prior to investing. Most 529 plans are sponsored and administered by states. State tax benefits vary among the states and some offer residents additional tax benefits if they invest in their own state plan. Consult a qualified tax professional for more information.

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