Many companies are considering offering 529 plans to their employees. These plans aren't new, but they're getting increased attention, thanks largely to the Economic Growth and Tax Relief Reconciliation Act of 2001. This federal law created additional tax benefits and greater portability among state programs.
Select an investment-funds manager that demonstrates due diligence. All 50 states, as well as the District of Columbia, sponsor 529 plans. These plans have the same features and are treated identically by federal tax laws, but vary regarding state income taxes, contribution limits, penalties, out-of-state issues, fund performance and other matters.
Ensure the program's success by providing employees with adequate education andcommunication. Without those important elements, you'll wind up supporting a program for a small percentage of employees. Communication can be costly. It might include newsletters, brochures and information sessions. Your investment manager also should have excellent communication materials.
The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.
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