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Add EdVest to your benefits package and see the return on your bottom line with a new tax credit
As a Human Resources professional, your coworkers look to you to help them manage many aspects of their lives. With tuition costs continuously on the rise, it’s never too early to encourage your employees to start saving for their child’s college tuition. Planning well in advance can help relieve the financial burden of post-secondary education later on down the line.
While it may seem the easiest way to start a college fund is to set up a standard savings account, it’s not the most ideal. In fact, in Sallie Mae’s annual How America Saves for College report, 45 percent of parents are doing so. But they end up paying thousands of dollars in avoidable taxes. While saving this way is better than not saving at all, a more efficient option is through a 529 college savings plan.
In 1996, the federal government stepped in to encourage saving for future higher education expenses by creating tax-advantaged 529 savings plans. These plans make it easier to save for college — even for those on a modest budget — and have become the most popular education-specific savings plans because of their tax-free benefits and higher interest rates.
The Edvest College Savings Plan is Wisconsin’s state-sponsored tax-advantaged 529 college savings plan. And a great benefit to share with your employees. As one of the lowest-cost 529 plans in the country, parents can open an EdVest account with as little as $25 dollars. Accounts can be managed online, and users can set up automatic contributions from their bank account or by payroll deduction with a minimum contribution of $15 per month. If your company doesn’t already offer a payroll deduction for employees, consider doing so.
As of May 29, which was National 529 Day — a day dedicated to raising awareness about the importance of saving for college, Edvest now offers enhanced tools available for employers who offer EdVest as part of their benefits package. These enhanced tools and resources are available to all Wisconsin businesses, associations, technical colleges, municipal governments and school districts at no charge.
"Employees today are looking to their employer to help manage their education savings goals,” said Jessica Fandrich of the Wisconsin Department of Financial Institutions, and Officer for the Wisconsin 529 College Savings Program in a press release. “Providing the option to contribute to Edvest via payroll direct deposit makes saving for college effortless for the employee, and is a great way for employers to differentiate their benefits package to attract and retain a talented workforce."
Companies that contribute to their employees' Edvest accounts may be eligible for a state tax credit. Employers may receive a tax credit equal to 25 percent of the contributions that the employer makes, up to a maximum tax credit of $800 for 2018 (adjusted annually for inflation) per employee per tax year. Employers should consult a tax advisor regarding the availability and ramifications of this credit.
There has also been movement around the state to make these college savings plans even more flexible. They can now be used for parents, as well as children, who want to continue their education. Because you can now change a 529 college savings account’s beneficiary to another member of your family without penalty, some people take out 529s with themselves as a beneficiary and then transfer it to their child’s name. Although contributions are not deductible on your federal tax return, also new for the 2018 tax year, any contributions may be deducted from Wisconsin taxable income up to a maximum of $3,200 per year, per beneficiary.
EdVest funds can be used for Wisconsin’s technical colleges and most accredited colleges and universities in the United States — even certain colleges abroad. Besides paying for tuition, the funds can also be used for fees, certain room and board costs, books, supplies, as well as computers and related technology costs such as Internet access fees and printers. Additional equipment required for attendance may also qualify.
All parents want a bright future for their child, and postsecondary education or training is the best way for that to happen. Help your coworkers avoid the burden of student loans, and encourage them to consider starting a savings plan sooner rather than later. Even small monthly contributions add up over time. Visit www.edvest.com for more information.
Wisconsin's 16 technical colleges serve every community in Wisconsin, provide learning opportunities close to home. The Wisconsin Technical College System offers more than 500 programs, awarding two-year associate degrees, one- and two-year technical diplomas, and short-term technical diplomas and certificates. The colleges also provide customized business solutions that help employers ensure a skilled incumbent workforce ready to improve processes or incorporate new technology. Visit www.wistechcolleges.org to explore all the benefits Wisconsin’s technical colleges have to offer.
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