Let’s face it—saving for college isn’t easy. If you’ve ever tried to calculate what it’ll cost to send a child to college, you might have considered selling a kidney (just kidding… kind of). College costs are rising yearly, and student loan debt is reaching unprecedented levels at a staggering $1.7 trillion in the U.S. alone. But here’s some good news: employers can help ease this burden by offering a 529 college savings plan benefit. It’s a powerful financial wellness tool that employees need but want—and it could give your company a considerable edge in recruitment and retention. So why should you consider offering this perk? Let’s break it down.

Employees are Seeking Financial Wellness Benefits—Especially for Education

More and more employees are turning to their employers for help with financial wellness. Studies show that employees crave support for retirement and other major financial milestones—like saving for their children’s education.

• A recent survey by PwC found that 77% of employees said financial stress impacts their productivity at work.
• Furthermore, according to the same report, 67% of employees want their employers to offer financial wellness programs that include help with saving for their children’s education.

A 529 college savings plan benefit isn’t just a "nice-to-have" anymore; it’s a must-have that employees are actively seeking out. Offering a 529 plan shows that you care about your employees' long-term financial wellness and helps alleviate their stress about the future cost of education for their families.

Why the 529 Plan is the Education Savings Superhero

You might think, “I thought 529 plans were just for college tuition?” Well, that’s not the case anymore. The IRS has expanded the flexibility of 529 plans, making them a truly versatile savings tool. Here’s a quick rundown of what they can cover:

• Primary and Secondary Education: You can use 529 funds for K-12 tuition, up to $10,000 annually. This is especially helpful for parents looking to send their children to private schools.
• Student Loan Payments: The SECURE Act of 2019 allows 529 funds to pay off up to $10,000 in student loans for the account beneficiary or their siblings.
• Rollover to Roth IRA: Thanks to new legislation set to take effect in 2024, unused 529 funds can be rolled over into a Roth IRA (up to a lifetime limit of $35,000), giving employees another tax-advantaged way to save for retirement. It’s a great way to avoid leaving money on the table if plans change.

These added flexibilities make 529 plans one of the most attractive savings options for college and a variety of educational and financial goals.

The Tax Benefits of a 529 Plan: More Bang for Your Buck

One of the biggest draws of a 529 plan is its tax efficiency. Here’s why employees—and employers—love it:

• Tax-Free Growth: Any investment gains within a 529 plan grow tax-free. When it’s time to withdraw the money for qualified education expenses, employees won’t owe federal taxes on those earnings.
• State Tax Deductions: Many states offer additional tax breaks to encourage families to save for education. In fact, 30 states (and Washington, D.C.) provide a state tax deduction or credit for contributions to a 529 plan. For example:New York offers a state tax deduction of up to $10,000 for married couples.
  Pennsylvania allows for a tax deduction of up to $30,000 for joint filers.
  Oregon provides a deduction of up to $6,000 for married filers.
  Illinois offers a $20,000 deduction for married filers.

These tax benefits make saving through a 529 plan much more appealing and financially rewarding for employees.

Real-Life Success Stories: How 529 Plans are Changing Lives

The real beauty of 529 plans? They actually work. There are countless stories of families successfully using these tax-advantaged accounts to ease the burden of college costs. Here are just a few examples:

• Jenna from Chicago: Jenna’s parents started a 529 plan for her when she was just 5 years old. By the time she was ready for college, the account had grown to cover all of her tuition and some of her living expenses, allowing her to graduate from the University of Illinois debt-free. Jenna is now starting her career without the weight of student loans, giving her a huge financial head start.
• The Smith Family from New York: The Smiths started contributing to a 529 plan for their two children early on. When their oldest child, Jake, went off to college, they were able to use their 529 savings to cover his first two years of tuition. Jake also avoided taking on loans, which has allowed him to focus more on his education and less on future debt.
• Mark from Pennsylvania: Mark used his 529 savings to pay for his college expenses and help pay down $10,000 of student loan debt for his younger sister. Thanks to the flexibility of the 529 plan, his entire family benefited from the account, lightening their collective financial load.

These stories highlight how powerful 529 plans can be in helping families reduce oreliminate student debt.

Thrive: Taking 529 Benefits to the Next Level

So, you’re sold on the benefits of a 529 plan—but how do you make it even better for your employees? Enter Thrive. Thrive lets employers offer 529 savings benefits to their teams in a way that fits the company’s budget and goals.

Here’s the rundown of Thrive’s three programs that can help you give employees a head start on their college savings:

1. Flexible Match: With this option, employers give employees the flexibility to allocate their retirement match to their 401(k) plan and their 529 college savings plan. It’s a win-win for Employers and Employees alike!
2. Employer Match: This one’s simple—employers match a percentage of employees’ contributions to their 529 plans. It’s a straightforward, effective way to boost savings and show employees you’re serious about helping them (and their families) avoid debt. Whether you want to match contributions dollar-for-dollar or cap them at a certain percentage, it’s totally up to you.
3. Employer Pay: For the : Mark used his 529 savings to pay for his college expenses an help pay down nts. Whether it’s a one-time bonus or a regular contribution, Employer Pay allows you to add to their savings without requiring employee contributions first. It’s a win-win for everyone.

At the end of the day, offering a 529 plan isn’t just about saving for education—it’s about helping your employees feel more secure about their financial futures. Financial stress is one of the biggest causes of employee distraction at work, with 72% of workers admitting that money worries impact their job performance.

By offering a 529 savings benefit, you’re helping your team save for their children’s education, reduce future student loan debt, and even prepare for retirement—all while enjoying fantastic tax benefits. And with Thrive, setting up a 529 benefit is easier than ever.

Final Thoughts: A 529 Plan is a Win-Win for Employers and Employees

Offering a 529 college savings plan through Thrive shows you’re committed to your employees' long-term financial health. It’s a benefit that doesn’t just help your team today—it helps build a brighter future for them and their families. And let’s be honest, assisting employees to avoid becoming part of that $1.7 trillion student debt statistic? That’s a perk worth talking about!

So, if you want to make a real impact with your financial wellness program, a 529 college savings benefit is the way to go. Your employees (and their kids) will thank you! If you’d like to learn more, contact us at Thrivematching.com.