By Dave Dominick, Assistant Director of Marketing and Outreach for the Pennsylvania Treasury Department
February 18, 2025
List of “must haves” for a competitive benefits package.
- Professional development. Check.
- Flexible work-life balance. Check.
- On-site childcare. Check.
- Pet-friendly office. Check.
- 529 matching for my kids. *Crickets chirping*
That sound of silence is about to get loud. For years, 529 plans have been helping families steadily and strategically save and pay for education expenses. According to the College Savings Plans Network (CSPN), families had more than $508 billion tucked away in tax-advantaged 529 accounts as of June 2024. This money can help pay for a loved one to become anything from an electrician to a teacher, depending on their chosen career path.
Though the amount in 529 plans has nearly doubled in the last decade, it is considerably less than the amount Americans have in retirement accounts. Data from the Investment Company Institute shows that retirement accounts hold more than $40 trillion. To put this into perspective, that’s roughly 7,700 times more than 529 plans.
Outreach is Key
One of the main reasons people save more for retirement is because most companies offer various savings options to employees on day one as part of a comprehensive benefit package, many times including matching contributions.
To make it easier to save for retirement, companies can offer 401(k) plans, individual retirement accounts (IRAs), deferred compensation plans, and more. Most often, employees set up these accounts as soon as they are hired and save steadily through automatic payroll deductions with each pay. By saving automatically, employees are less likely to miss a contribution. As the saying goes, “Slow and steady wins the race.”
Unfortunately, according to a report by Statista, only 10 percent of companies nationally offer workplace payroll deductions for 529 education savings accounts.
However, a growing number of employers are offering 529 plans as a voluntary benefit. Employees can pick a 529 plan and contribute using payroll deduction, and many state-sponsored 529 plans have outreach and education specialists to help both employers and employees navigate this process.
State agencies that manage both 529 and unclaimed property programs can find it easier to connect with new businesses. Outreach teams can identify unclaimed property owed to a business and use that as a perfect reason to begin a conversation that may lead to a meaningful relationship and additional resources for employees.
Offering a Business Tax Credit
There are other beneficial reasons employers may begin offering 529 plan access in the workplace. At least eight states now have laws that provide tax credits to companies that match employee contributions to 529 plans. In Pennsylvania, the latest state to offer a business tax credit, employers can claim a 25 percent tax credit on matches to employee 529 (and ABLE) contributions of up to $500 per employee. The Pennsylvania Treasury Department’s outreach team has already formed relationships with statewide and regional chambers of commerce to help engage employers.
By promoting a state tax credit for 529 contribution matching and emphasizing improving employee benefits and workplace culture, employers can see the long-term economic and social impact their contributions can have on helping create a more educated workforce for local communities.
An October 2024 article in the New York Times provided more examples of employers offering 529 plan matching contributions.
Resources
A Commonwealth report noted that most employees were interested in saving in 529 plans, especially those from low—and moderate-income households. There has never been a better time to approach employers about this important opportunity. The Commonwealth report outlines these opportunities and offers suggestions and best practices for employers to use when implementing a workplace rollout of access to 529 plans.
Many states also offer and promote Children’s Savings Account (CSA) programs like Pennsylvania’s Keystone Scholars, which provides a $100 investment for post-high school education for all babies born in Pennsylvania since 2019. Awareness of CSAs helps new parents understand the importance of saving early, starts them on their savings journey, and increases parental expectations for their child’s future.
What’s Next?
State 529 plan industry groups, like CSPN, remain engaged with lawmakers in Congress to enhance education savings accounts. Over the last ten years, 529 plans have expanded to include K-12 tuition expenses, apprenticeships, and student loan repayment as qualified expenses.
This, in part, has spurred the popularity and growth of 529 plans nationwide. Other initiatives, such as incentives to open accounts (see 529 Day activities), matching employer contributions at the state level, and increasing access to technology to manage accounts, are steps in the right direction.
Your company can contact your state’s 529 plan office to discuss potential outreach and learning opportunities. CSPN’s website maintains a search tool for 529 plans nationwide.
About the author
Dave Dominick is the Assistant Director of Marketing and Outreach for the Pennsylvania Treasury Department’s Consumer Programs, which includes the Pennsylvania 529 College and Career Savings Program, Keystone Scholars, and the Pennsylvania ABLE Savings Program. He also co-chairs the ABLE Savings Plans Network’s Data and Benchmarking Committee.