529 Plans: An A+ Choice for Employers?

College savings plans can help companies boost their employee benefits packages

Business owners are always looking for ways to show their employees they care — and with higher education costs rising every year, I believe there’s no better time for corporations to look into adding a 529 college savings plan to their employee benefits packages.

Today, a college education is estimated to cost close to $20,000 per year for an in-state, four-year public school, and $40,000 for a private university — that’s a pretty hefty chunk of change.1 But tuition rates aren’t the only numbers on the rise. According to the Bureau of Labor Statistics, the costs to implement employee benefits programs, such as health insurance and 401(k)s, are increasing as well.2 As a result, employers may be interested in incorporating easy-to-administer 529 accounts into their benefits packages, as 529s can provide an added perk for employees without adding significant overhead for the employers.

Helping employers may help grow your business

529 plans offer a great opportunity for employers to support their employees and bolster their compensation packages — and they may not be a bad way for financial advisors to build their own business in the process. Only around 10% of US companies offered 529 college savings plans to employees in 2015,3 which means there’s a lot of opportunity to introduce your corporate clients to the flexibility and opportunity a 529 plan can provide to their employees. Employers may enjoy a low-cost way to help their employees save for their children’s future, and employees may benefit from the convenience of saving for college through payroll deduction.

While you’re at it, consider your individual clients who work at firms without existing 529 benefits in place. You never know if an introduction to their company’s human resources department might lead to an opportunity to serve as their corporate 529 advisor. In fact, a conversation that starts with 529 plans may even lead to the chance to get an IRA rollover that may be sitting in the 401(k) of a former employer from years ago — how’s that for an opened door?

For employers looking to attract and retain the best employees, a 529 plan could be an added carrot in the benefits package. For advisors looking to expand their practice, introducing the idea of a 529 as an employee benefit is one more opportunity to add value to your relationships. Low cost, easy to implement and helping ensure an educated workforce for the future — what’s not to like?

Read more expert views on 529 college savings plans.

1 Source: www.collegeboard.org, Trends in College Pricing 2015, Table 1A

2 Source: Bureau of Labor Statistics, https://www.bls.gov/news.release/eci.nr0.htm

3 Source: Society for Human Resource Management, via The Wall Street Journal, “The latest corporate benefit: The 529 plan,” March 27, 2016

Thomas Rowley
Director, Retirement and Education Strategies

Thomas Rowley is director of retirement and education strategies and one of Invesco’s most frequently requested speakers. He provides analysis of the evolving retirement landscape and develops actionable strategies to help investors and financial advisors maximize their retirement-planning opportunities. Mr. Rowley regularly shares his insights online at invesco.com/us in addition to his speaking engagements.

Mr. Rowley’s insights reflect more than 20 years of experience in the investment industry. He translates his comprehensive knowledge of retirement planning into lively, clear explanations of the complexities of legislative, investing, tax and social issues.

Mr. Rowley shares his analyses of retirement-related issues through regular personal appearances, continuing education webinars and Web-based commentaries.

Mr. Rowley has been director of retirement business strategy since 2010. Prior to joining Invesco in 2010, he was in charge of individual retirement plan products and Retirement Marketing at Van Kampen.

Prior to joining Van Kampen in 1996, he was a 401(k) regional sales director with an investment firm. His experience also includes seven years in retirement plan operations and three years as head of a brokerage firm’s retirement help desk. He began his career in the Treasury bond futures pit at the Chicago Board of Trade.

Important information

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The information provided is for educational purposes only and does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

All data provided by Invesco unless otherwise noted.

Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail products and collective trust funds. Invesco Advisers, Inc. and other affiliated investment advisers mentioned provide investment advisory services and do not sell securities. Invesco Unit Investment Trusts are distributed by the sponsor, Invesco Capital Markets, Inc., and broker-dealers including Invesco Distributors, Inc. Each entity is an indirect, wholly owned subsidiary of Invesco Ltd. PowerShares® is a registered trademark of Invesco PowerShares Capital Management LLC, investment adviser. Invesco PowerShares Capital Management LLC (PowerShares) and Invesco Distributors, Inc., ETF distributor, are indirect, wholly owned subsidiaries of Invesco Ltd.

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