A couple of weeks ago, a reader noted, ‘I must receive at least 10 plugs a week for the 529 Plans. But to tell you the truth, I’m scared to death to add another administrative burden to our current benefit layout. The brokers profess that there is no administrative burden, unfortunately I am like an elephant and I also remember when they said the same thing about 401(k)’s.’
Those representations aside, this week we asked readers ‘Do you have – or are you considering adding – a Section 529 college savings program as part of your benefits mix?’
Nearly 64% of our reader respondents already have in place – or are actively considering implementing a 529 college savings program. Even so, the other 36% seemed to have already given active consideration to the topic before discarding the notion.‘We are considering 529’s because
we consider everything, especially
those programs which brokers and
financial consultants bombard senior
management with propaganda about…’
The good news for those who are still considering them
-plan sponsors that have embraced the notion seem to be
quite happy with the lack of implementation pain – even
though the programs may not yet have really caught on with
workers. One reader’s comment was typical,
‘The enrollments have not been high, but steadily
increase each payday. There has been little
administrative burden and no cost to us. I’m pleased
that we can offer our faculty and staff this new benefit
and didn’t have to request budget money to run the program
or pay any costs.’
Those who have opted not to support these programs frequently cite a lack of familiarity with the issues involved with implementing a 529 plan, concerns about the fees imbedded in the programs or a general sense that this alternative is available to workers outside of workplace participation. One reader offered this illustrative perspective ‘The people pitching 529 plans don’t want to talk about fees or net investment returns – they want to talk about ease of enrollment. Last time I checked, it’s the investment returns that will determine whether your children will be able to go to the college of their choice.’
Another noted, ‘…this benefit is easily accessible to individuals, we are not interested in taking on the additional administration and certain states offer extra tax benefits for the 529 plans affiliated with their state. Next month we have a 529 fair planned at our largest office. 5 vendors have been invited so that our employees can talk to each. Short general educational sessions will be presented…’
And then of course – there’s this week’s EDITOR’S CHOICE : ‘We are considering 529’s because we consider everything, especially those programs which brokers and financial consultants bombard senior management with propaganda about…’
All in all, there clearly seems to be a lot of 529 selling going on – and a respectable amount of buying.
But why take our word for it – come check out the rest of the VERBATIMS . While as always we wanted to respect the confidentiality of our respondents, we have included provider names and comments this week. The vast majority are positive – and it may offer those of you who are contemplating offering the programs a good place to start. You may also want to check out our WEB WATCH from the March issue of PLANSPONSOR – Surfing Section 529 .
Thanks to everyone who participated in our
The question was: Do you have - or are you considering adding - a Section 529 college savings program as part of your benefits mix?
We do not have nor will we be adding a sec 529 plan
We began our Section 529 Plan on January 1, 2002. We chose TIAA-CREF as the vendor, as that is the vendor of choice for the state of Minnesota. The enrollments have not been high, but steadily increase each payday. There has been little administrative burden and no cost to us. I'm pleased that we can offer our faculty and staff this new benefit and didn't have to request budget money to run the program or pay any costs.
We do not have a 529 plan but are considering it. I
wish that these were as clean as 401(k) products in that you
could do your due diligence, select one, and then monitor
These plans are different in that better investment options vary by the age of participant's children, and tax benefits vary by the state people live in. The vendors were also picked by government officials who had a bias towards companies in their own states. Thus people will have to compare state tax benefits to expected investment returns.
We will likely invite a couple vendors in to pitch their products and educate our staff. We will also provide some tools on finding other 529 vendors to our staff. It is unlikely we will recommend any of them. We currently allow our staff to direct their paycheck to be deposited in to up to 3 accounts such as checking and/or savings. They may use this option to direct deposits from their pay to a 529 account.
No, we don't plan to offer, but we do encourage employees to set these up on the their own through bank drafts, etc. As a Fidelity client, our employees get a host of personal services available to them with little of no fees attached as long as they have a 401(k) account. 529 College Savings Plan are a part of this.
My company is not considering a 529 plan this year since employees can enroll as individuals and do not require a group contract to take advantage of a 529 program. Like so many other employee voluntary plans, the vendors' promote the ease of administration and discount the difficulty of multiple payroll feeds, payroll corrections, IT resources, leaves of absences and other employee and employer administrative issues that make a employee voluntary plan burdensome.
Our Company is not considering adding a 529 plan to our menu of benefits.
No way! At this time, I have no intentions of adding a 529 plan to my benefit offering. I to am an elephant. Although I was a toddler when the 401(k) was invented. So I don't remember any of the promises made at that time. Seriously, although I may not offer it, I have no hesitation to inform my employees of this plan. Actually I recently wrote an article in our newsletter explaining what a 529 plan is. Did it help? I don't know, but at least I've provided an alternative outside of our plan for our employees to investigate. Our plan allows loans for education and if I can work on my employees now and get them out of the thought pattern that "I can borrow against my retirement to pay for Billy and Janie's college" then I have succeeded. I think?!
After much research, we did offer a 529 on January 1,
2002. Because we have employees in 47 states, we tried
to just look for the "best" plan, and didn't include any
state-tax incentives in our comparisons. We also tried
to ignore the brokers' hard sell of Rhode Island's plan, as
they (the brokers) get generously compensated for selling
this one. Getting info besides what is available on the
website was rather like pulling teeth for those states that
hadn't yet put plans with brokers, and weren't really set up
to sell outside their state.
But we persevered! Because we have both high-paid
execs who were interested in the plans from an estate
planning perspective as well as many minimum-wage employees
who couldn't afford some state's monthly minimums for payroll
deduction, this research was quite time consuming. The
things we listed as most important: High maximum, low
minimum, low fees, investments available must include all
three of full equity, date of birth-type, and a fixed option
with a "guaranteed" return, as well as a web-site, people
available to do employee meetings and good customer
service. We ended up offering TIAA-Cref's CHET plan
My company is considering looking into adding a 529 plan. With the market's performance so poor - employees are not clamoring for it. I've done a decent amount of research on the plans, and have come up with the following conclusions:
1) 529 plans are sold, not bought. One only has to look at the Tower Automotive situation to know this. That a company wouldn't seem to consider the tax advantages of the plan in the state where most of their workers are located is unbelievable.
2) The people pitching 529 plans don't want to talk about fees or net investment returns - they want to talk about ease of enrollment. Last time I checked, it's the investment returns that will determine whether your children will be able to go to the college of their choice.
I have been looking into 529 plans for my own children and
haven't been able to find a plan that I am comfortable with -
how can I make a similar recommendation for my company's
We are planning to add a 529 plan to our offerings this summer. We haven't made a decision as to which one yet. This may not be a true employee benefit, since all of the 529 plans can be entered on your own, but I believe the opportunity is too great not to get this information (and the opportunity for payroll deduction) in front of our employees.
529 Plans ... we are considering.
Yes, we are considering adding a 529 plan. But, I do not view it as a benefit.
Yes, we are considering adding a 529 plan this year.
We just installed a 529 plan at the beginning of this month. Although the response has been "underwhelming", I can say that I remain very enthusiastic about the plan itself, both personally and professionally. My VP of HR and I spent several hours reviewing the plans together ourselves and with a financial advisor who pitched the concept to us -- we went through every detail of how the plans work in general and then a couple of specific plans to determine what would be our best option.
While nothing carries NO administrative burden, I can tell you that the burden of implementing one of these plans is minimal. I do recommend working with a broker; mine is handling all the paperwork and the vast majority of the communication -- I make sure he has access to the employees and vice versa and he does the rest. All questions, enrollments, everything goes through him. All I do is set up the payroll deductions, since we do payroll in-house, and cut a check once a month to send to the investment company.
Honestly, if an employer wants to stay on the edge of what's being offered, this is a very simple way to do it. Plus you may be able to get the investment house to waive their loads if you do it through payroll deduction, which they won't do for your employee if s/he walks in off the street to open the account. In a nutshell, we couldn't find a reason NOT to offer the plan.
As you can tell, I couldn't resist the opportunity to
weigh in on this! I was the first to enroll in our plan, and
when my daughter graduates high school in 2013 I'll be ready!
In response to your question regarding 529 plans - we are not planning to offer this as a corporate benefit. We are a company operating in 5 states. We have decided it is better to educate our employees about 529 plans and let them know they can use direct deposit to send money to the account they set up.
We have taken this stand for a number of reasons; this
benefit is easily accessible to individuals, we are not
interested in taking on the additional administration and
certain states offer extra tax benefits for the 529 plans
affiliated with their state. Next month we have a 529
fair planned at our largest office. 5 vendors have been
invited so that our employees can talk to each. Short
general educational sessions will be presented.
529 Plans are everywhere. This is an incredibly complex decision because of the wide variety of offerings and the vast differences in how the individual states handle their own residents. I share the concern about the so-called "easy" administration and the burden that we may place on our administrative systems. We are not yet close to a decision as we need to think about the most advantageous treatment for employees in 47 states.
We are considering 529's because we consider everything, especially those programs which brokers and financial consultants bombard senior management with propaganda about...However, in our case, we have low participation in our 401(k) plan at the lower levels of compensation and the only real advantage of the employer establishing a 529 is, of course, payroll deduction. Higher paid employees should not need payroll deduction to establish their own 529 plans. So there is no real reason for the employer to establish one, if the employees who would benefit most from payroll deduction do not now participate in the 401(k) plan.
Obviously, I am not one who subscribes to the theory that we offer as many "cost-free" benefits as possible to our employees, just so we can show what a great array of benefits we provide (at minimum expense to the employer) and get on some trade magazine's "Top Ten" employer list.
As I tell the senior execs, if you are being inundated with calls from brokers/consultants/insurance agents to establish these programs, (as we were with LTC insurance a few years back) who do you think is going to benefit most from the programs?
Also, all I need is one more number or acronym to totally confuse employees...401(k), 403(b), 457, 404(c), 11-K, 1099-R, 125, CODA, IRA, SEP, HMO, PPO, POS, IPA, FSA, IRS, DOL, ERISA, COBRA, HIPAA and now 529. And we wonder why they don't appreciate the benefit programs we already offer.
Sorry about venting, I am a little stressed today. I guess I should call my EAP.
Depends on the provider of the service for the work that a plan sponsor would need to be provided in. Several providers are willing to do the mailing to participants and will suggested direct deposit for a monthly contribution to the 529. This is just like splitting a pay check between two checking accounts, so should not be hard for an organization if they already have that ability.
I go over all the state plans where my clients are located and compare them to the two that Fidelity offers. If they have a large presence in NY, MO, or CA I will tell them to look elsewhere. The state benefit of their plan is far better.
The hardest thing to get through a plan sponsors head is that this is not one large plan, but more like IRA's. Once they understand that they make their decision to move forward quickly!
I added a 529 plan several months ago. Although it did require a fair amount of time researching the plan and then setting-up educational meetings, I spend little, if any, time on the plan now that it's instituted. The brokers took and take all the burden of answering questions and giving assistance to my employees.
We are considering adding a Section 529 college savings plan.
Yes, we are considering adding Section 529 Plans, but only through direct deposit. We have employees in multiple states, so it is important to determine whether it is best to go with a national firm or through each state. So far, we think using each state's plan would be the best. No decisions have been made yet.
We have just "sponsored" a 529 program in Virginia. The contributions happen directly from the participant's personal bank account and there is no paperwork that passes through our department. A new employee is handed the package at their orientation and either applies or not - it's up to them. They mail the application directly to the broker.
The employees could get the same plan by going to a broker. By "sponsoring" the plan, the administrative fees charged by the funds in the plan are approx. 50 basis points lower.
No discrimination testing, no paperwork, no payroll withholding and transfer. Employees get discounted access, set up their own payment plan, get professional advice, some get state tax deduction and they save for college tax free (or deferred, depending on the sunset clause). Why not?
529 is something we will implement very shortly and some
recent products - such as the one offered through American
Funds (College America) requires ZERO (0) administrative
Like many types of insurance, this is a benefit that is currently more sold than bought. The broker blitzkrieg on these plans may be having some affect despite some strong reservations on my part. A couple of points to keep in mind.
1) 529 plans don't require employer involvement. Employees can (and I have) signed up for 529 plans without any need for an employer to make the contribution. The IRS Code Section reference makes people think of them like 401(k) plans. 401(k) plans require an employer to make the contribution. 529 plans do not. The brokers like to say that if the employer takes care of it through payroll deduction, they will waive the load. But there are also no-load 529 plans. In this respect, they are more like IRAs.
2) Multi-state employers need to consider the potential
state tax implications. There was a good article on
this in the April 5 Wall Street Journal. If you pick,
say, the Michigan 529 plan for your employees, your Michigan
employees can get a nice state tax deduction, but it won't do
a thing for your California or North Dakota employees.
(Federal tax exemption would continue to apply.) The
only way to make everyone happy is to permit a 529 plan
deduction for every state you operate in or, better yet, let
employees make their own choices and stay out of it.
We spent time looking into it, but in the end opted not to do it. We found that at least some of the money management firms offered it retail for the same cost as if we as a corporation sponsored it. So why take on additional exposure when we are adding no value? The individual is free to sign up at no cost if they go with a systematic investment election, which is the best way to do it anyway.
We are not considering adding a 529 plan benefit.
We are considering offering a 529, but like the reader you quoted I am concerned about the administrative demands. My staff is, like most HR departments, already "maxxed out"
Regarding 529 plans -
We are having our TPA handle everything, we are not even offering payroll deductions. This benefit will be enrolled through the company but from there our TPA will send out bills based on the frequency the employee requests at sign-up and employees will use a website and phone contact for investment options and account changes.
This set-up will also allow employees to take this benefit with them if they leave our company (we are a staffing company so we have high turnover) without having to go through a sign-up process similar to COBRA or Life.
We examined offering a 529 plan earlier this year. Our conclusion...realistically, for the average parent trying to put money away for his children's
We are planning to add a Section 529 plan by the end of summer. I have serious concerns that the marketing blitz around 529s may lead the uninformed consumer to make a choice that is not optimal. With the sunset provisions on 529s, many people could have tax problems if tax favored treatment is not extended. Additionally, consumers should also look at other savings vehicles such as a Coverdell IRA.
Service providers missed the boat on 529s by not being out front with the offering of payroll deduction. Most employees find payroll deduction to be an easy way to save. We have arm twisted our provider into offering true payroll deductions, not the checking account debit option. We're hoping this will encourage people to look at 529s.
Our communications campaign will provide lots of
information about 529s, alternatives and the differences with
certain state sponsored 529 plans. I suspect some
people have not already gotten into tax favored plans because
of the tremendous amount of confusion and lack of clear
I have considered adding a 529 plan to the benefits offered for our 2100 employees, but decided against it for the time being because of the limited tenure for the benefit. An employee could save for a young child's education and find that the tax benefit is gone by the time the child reaches college age.
We are looking at a 529 offering, but like the quote in the newsletter, we are concerned about the administrative headache.
We have been getting a lot of solicitations also, and my senior management wants me to take a look at it. Frankly, I'm not seeing the "value added" from an employee benefits perspective. It's nothing more than the old payroll deduction for savings bonds the way I see it. It's not pre-tax, so taking it from a paycheck isn't of benefit. I've not seen any "group" pricing, so the power of large groups isn't helping. I think it's a very important savings vehicle that anyone with children should pursue (I've had one of my own for my children for several years...even before the recent tax enhancements). But why do it by payroll deduction?
The other concern I've seen, but haven't researched, is that since these are state sponsored programs, there may be some tax implications if you offer a single program company wide for employees not in the state sponsoring the program.
Since we're a financial services organization, our sales folks are out there selling these things like crazy to our customers, though. So I'll keep looking
We are not considering a 529 with no plans to add one.
I would like to see a possible offering of the plan via
work, however, without a pre-tax benefit for employers, I
don't see the benefit to sell as a cost-saving benefit as
However, I can see it being a good possibility to encourage employees to save in addition to their retirement, but, also, see those with families struggling with the constant health insurance cost increases, as is, so would need to know if it would take off.
We added the NYSAVES and NJBEST plans via payroll deduction effective 1/1/2002. Some admin burden for sure, but not a major issue. Scads of sales calls, and now I just say we already implemented, and they thank me and hang up.
We selected these two because 99% of our 23,000 employees live in NY and NJ, and they both have very low admin fees and/or commissions.
Enrollment is low, but growing.
We are considering a 529 plan, but are also concerned about the administrative burden. I also get 5 calls a day on offerings..... I refer them to my broker and then they pretty much leave me alone (that is, sometimes)
We anticipate offering this benefit by Oct '02
For a small company, we offer a competitive benefit package. I, constantly, try to communicate its scope to the employees. Then my boss comes in and asks, "do we have a vision plan?"
Why would I throw a 529 into the soup?
I'm definitely interested in adding a 529 Plan and I agree with your previously quote - there is as "little" to do as there is to administering a 401(k). With that aside, I do have a lot of questions as to the issues with these plans and would like to hear from those who have already set up a plan.
We have a 529 program. It's been in for about 8 months. The admin burden consists of distributing intro material, telling those with questions to call the broker, and collecting forms. We went with Alliance because it was the only one with payroll deductions. Became real concerned when it looked like Alliance wasn't making the most well thought out investments (read Enron).
From a fiduciary point of view thought we should revisit
using them. The rest of the committee didn't feel as strongly
about it so we've kept them. We encourage those considering
Alliance to check out the
web site to get general info on 529s and about other
We have made summary info available to all employees, but we have not yet offered payroll deductions. We have not recommended any one plan, because there are so many different variations, and they all seem to be changing structure and options regularly.
We added a Section 529 plan last fall (2001) and it's a big hit! And, even better, there's basically no internal administration for our Benefits staff. It runs very smoothly!
We use the plan from Rhode Island, through Alliance
Capital. I would definitely recommend it to other employers.
Good Morning from Illinois,
We recently made application for the College Bound fund through Alliance Capital. This fund permits distributions to any accredited institution of higher education versus our state plan that is restricted to Illinois colleges. There are several employees enrolling however on a personal level, I am not sure that this is the way to invest. We must remember that the laws governing this program are not indefinite and the question is, "then what?" Since it is an after-tax program, why not just open a mutual fund account?
Our company is on the small side and none of our employees have requested this benefit. Our management is very employee driven as far as benefits go. They don't usually review the benefits or compare them to the competitive market. The approach is more reactionary and look into something when too many good employees are lost because something isn't offered. For example our 401(k) didn't start until July 1997.
My wife and I have started a 529 for our niece and nephew
so I think I have a pretty good understanding as to the
mechanics of the program. However as a benefit what are
we talking about? The employer managing the plan and
paying the administration fees while the employee funds the
account or do some companies even fund the accounts? If
so how is it handled if some employees don't want a 529
because they and everyone in their family is smart enough?
We are planning/hoping to add a 529 option to our benefits this year, but have not selected a vendor yet.
I have noted at least one broker who tried to sell their product as "no cost". What he wasn't saying is that, while there is not a direct charge to the employer, there are management and/or annual fees charged to the participant. As with 401(k)s, employers will probably have to do some digging to assure fees are reasonable (and then make sure the participants are informed).
We are actively considering offering it as an employee benefit, however I also have concern over the administration as my team is very small and supports a large population with less.
I have heard that if a child has these accounts set up for them that should they want to apply for federal aids or scholarships that they will now not be eligible for those programs. Is that true?
I have also heard that you can set this up for a child and
should that child decide not to go to college, you can
transfer these funds to a new child: HOWEVER and here's the
catch that I have heard, that child must also be a part of
that immediate family. For example: I have two
children, I set the account up for one, they decide to not
attend college, I can transfer that fund over to the second
child. Ex: I have one child, I establish a 529 Plan,
and they decide they do not want to go to college, now I
can't transfer that fund over to a niece or nephew, as they
are not immediate in the family the plan was
established. I would find that the second is example
was true, but can someone clarify?
We currently have a 529 plan that we implemented last year. My only concern is I hope that California gets on the bandwagon and makes qualified withdrawals tax free!
We are just starting to evaluate. Information is somewhat hard to come by, and the objectives of different areas of the company (Finance and Benefits) are not always in tandem (what's new?). Hope to know more in a few months.
In reviewing 529 plans, it appears that much is dependent on state laws and their deduction status. Many states, like Maryland, have their own broker and you must use their plan for the state deduction. Unless a broker offers a serious discount for an employer benefit plan, there appears to be little incentive to offer a 529 plan through an employer, especially multi-state employers. Certainly, anyone could do a payroll deduction into an individual's plan and certainly employee education is always a good thing, but as an employer-provided benefit, I don't see any great upside. A 529 plan can be an excellent personal savings and investment program, but there appears to be little advantage "offering" it though the employer.
We are considering adding a Section 529 plan but are just in the information gathering stage. Areas of concern - company liability, administrative burden, cost of education/implementation.
Considering adding but concerned over:
The fact that certain state plans may be more advantageous to employees than a generic 529. What is our "obligation" to explain this in the 40+ states in which we have employees?
Are other companies promoting Upromise in conjunction with their 529? http://www.upromise.com/
Will enough employees consider this a valuable addition to our benefits package to make it worth our while?
We do plan to add a 529 plan. Since we have employees in over 40 states, we will need to develop communication materials explaining the various state tax provisions.
Yes, my organization is looking to introduce a payroll-deduction 529 plan this year (offered through Fidelity, also our 401(k) plan provider).
We are doing implementation due diligence as I write this to ensure that the program can be delivered to our employees as efficiently as possible (we - HR & Finance/Payroll do NOT want, and won't, take on an excessive administrative burden). Otherwise, this seems like a no-brainer (high value, high visibility, no "hard dollar" cost, completely voluntary to the employee - if you want the investment options of a different state plan "have at it", etc.). The offering is also consistent with the benefits component of our broader "people strategy" (to provide competitive rewards programs), and this offering seems to be - or will become - a competitive practice.
Big picture, I don't see the downside.
My company does not sponsor or endorse any 529 plans, nor does it provide a listing of 529 plans. The company will, however, enable employees to direct part of their paycheck to a 529 plan, just as they can direct deposit to a bank. Employees are given the name of a popular website that does reviews of each state's plan.
This is a major "land grab" opportunity for the
brokers....once the money is in the plan, it stays for
umpteen years....a nice cash flow due to very high fees, with
little or no risk of its leaving. The hook, of course,
is the extremely beneficial tax treatment to
investors...until 2010 anyway, then who knows what will
I'm glad you are surveying about 529's. I am entertaining the idea of adding a 529 option as an offering to our employees, but right now I am inclined to drop the idea. My main concern is this scenario:
In an effort to help our employees save for college expenses, if we offer a 529, then some years down the road the investment returns of the 529 plan we chose to offer may turn out to be less attractive than some others on the market, so our employees are unhappy, thinking they could have done better selecting a 529 plan on their own. Why stick the company's chin out there when we really don't have to? With some other employee-pay-all offerings (optional life insurance, long-term care insurance, etc.) there is a benefit to the employee through group rating, guaranteed-issue underwriting, or whatever.
While offering a 529 helps the employee by allowing "easy" payroll deductions, there really is no other meaningful benefit provided. One could argue that the company helps by doing the comparison shopping for the employee, but then that brings me to my main concern - - - it would place the employer in a quasi-fiduciary role... and I don't need any more fiduciary liabilities.
When employees have asked me about 529's, I have referred them to the internet (I have even printed out some internet information for those less PC-literate) and suggested they talk to their banker or broker. I think that's as far as I want to go right now.
We don't have a 529 plan yet. Some of our executives are asking for it, so we soon will offer or endorse one!
I am in the process of analyzing the offerings. Frankly, I don't need another employee payroll deduction to complicate my life even more. I'm leaning toward a plan that has automatic deduction from a checking/savings account (handled by the company reaping the benefit of those dollars) instead of a plan that uses me, the automatic benefits administrator, who only reaps the benefit of extra work. Seems like a no brainer to me, but we'll see if anyone else values my time!
The difficult part is comparing all the possible fees they
can charge: program fees, administration fees, account fees
and sales charges. I think they (the companies offering
529 plans) are trying to blow smoke, so we get frustrated and
don't dig too deeply and find out that they have invented
another plan to transfer money from our pockets to theirs.
Yes, we are seriously considering offering our employees the opportunity for payroll deduction of the Wisconsin Plan, the state were our employees work. We have ~3,000 employees. Other than that we are not endorsing any specific plan. The question we have is how are other employers sorting through the confusion of information that we all receive on the Plans.
Thanks and I enjoy the daily information.
We are currently evaluating 529 plans, although it looks like our recommendation will be to not add a 529 plan to our mix of benefits at this time. We are going to add information on 529 plans to our Benefits Intranet and a link to www.savingforcollege.com
The main reason we are not going to offer a 529 plan is that we are uncomfortable picking just one 529 plan and administrator to work with. We have employees in 41 states, so we cannot offer a 529 plan for each state--administratively impossible. And there are tax advantages to those employees in the state where the 529 plan is administered, but maybe not to employees in other states. Also, there is some concern about the liability of offering a particular 529 plan and then that plan doesn't do well compared to a plan that the employee could have utilized within their home state that perhaps performed better.
And, last by not least, 529 plans are just too new.
We'd like to see "how it goes" before jumping in head first
and adding it to our benefit package.
We won't be offering a 529 plan either. Our position is that anyone that wants one - and it will likely be the highly-paids - is already being inundated with solicitations and so doesn't need our help.
Regarding 529 plans - We implemented Fidelity's Employee Investment Services (EIS), which includes a 529 plan at the beginning of this month. Employers may choose to implement a 529 plan without the entire package. Fidelity completed the entire mailing of information to our employees' homes. Employees may call to enroll or enroll through NetBenefits, the Fidelity website open to our employees as a result of their administration of our 401k plan.
Fidelity is also providing a road show for our plant
locations free of charge. They will review basic
investment principles while focusing in the EIS benefit,
particularly the 529 plan. We received our first
"direct deposit" enrollment form in our Shared Services
Center this week. It took all of 2 minutes to update in
our HR/Payroll system. Employees may choose to
participate through direct deposit from our payroll,
electronic debit from checking or savings accounts, or pay by
We also explained to employees that other plans are available and recommended they check out Savingforcollege.com or see a financial advisor for more information. Our employees are able to see their company sponsored 401k plan account information and the new EIS account information in one place on the internet and all the information is aggregated for financial planning through Portfolio Planner in NetBenefits.
Fidelity expects approximately 11% enrollment, not all of who will request direct deposit from payroll. All calls into our Shared Services Center regarding this benefit are directed immediately to Fidelity. We really do very little to administer this plan, and since it is not an ERISA plan there are no dreaded filings to complete or spds to create.
Ask me in another year how things are going and I hope to
be able to continue to wax as eloquently about Fidelity's
product as I can now!
Yes, we are adding a 529 plan through our Fidelity 401 (k) plan. It isn't a big administrative burden, but does require payroll to take some additional money out of an employee's check.
We are not considering the Section 529 college savings program. We don't want any competition for the 401(k) plan. It is always a struggle to increase the deferral levels, so that our highly-compensated employees can contribute more and still have the plan pass the nondiscrimination tests.
We have provided employees information about 529's thru our 401k recordkeeper, Fidelity. The employee can set up a direct deposit to a Fidelity account. There are no administrative issues since it is a direct deposit election only.
It looks like we will be adding a 529 to our mix. We, too, have been told it's a no-brainer because there is supposedly no administrative burden. But because I will be stuck with it, I am very skeptical.
I have to agree with the person who said he didn't need any additional administrative burdens. Although a 529 option would be wonderful for people who wish to save for their kids' college education, I just don't believe the benefit is that easy to administer. Given the amount of problems I have with our 401k plan, as we Texans say: "That dog won't hunt."
We do not offer a 529 plan. We looked at this and decided the administrative aspects as well as setting up a deduction for this would cost the company money for something that the employees could do on their own as a deduction from a bank account.
My company already has a 529 plan and the reason it is not administratively burdensome is that it seems that only 5 people know about it (out of 2,000). Sarcasm aside, our plan is through TIAA-CREF, it is called the Scholarshare plan and does seem to be light on the admin. Employees fill out a form or go on-line to enroll, submit a check for the initial deposit or do a direct debit, then send the payroll deduction form to payroll. I never get involved. Statements are sent directly to participants and they may only change their investment style once a year. There is no recordkeeping such as audits, 5500's, discrim testing etc.
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