In what is being hailed by some as "landmark legislation," Nevada has created a tax credit for employers who provide matching contributions to a 529 plan as an employee benefit.

The law, passed earlier this month and signed by Gov. Brian Sandoval, will allow a 25 percent tax credit on matched contributions up to $500 per employee.

“Nevada is a leader in creating access to helping residents save for college education,” Derek DeLorenzo, senior vice president for client relations at Ascensus College Savings, says. “There’s only one other state that has this type of legislation, and that is Illinois.”

Ascensus administers three of Nevada’s 529 plans.

The legislation was drafted to encourage employers to offer 529 plans as a benefit, and to increase the use and popularity of the savings plans in Nevada.

“There is a belief that the workplace is a great opportunity to educate people on the need for saving on higher education,” DeLorenzo says. “The feeling is similar as to what has happened in the 401(k) space, where employer matches have increased awareness and participation.”

State Senators Becky Harris and Mark Lipparelli drafted the law.

“This legislation is going to help Nevada’s residents access education in a whole new way,” Harris says. “(The bill) presents a great opportunity for Nevada employers to contribute in a way they have not been able to in the past and will help to provide additional opportunities for their employees to extend their own education or pay for their children. It’s a game changer.”

The tax credit becomes effective on Jan. 1, 2016.

Recent studies have shown that Americans have yet to fully embrace the 529 plan as a savings vehicle, with only 27 percent of families using them, according to a recent study by Sallie Mae. Additional research from Edward Jones found that two-thirds of Americans don’t know what a 529 plan is.

The numbers have sparked a nationwide campaign on the part of administrators and public officials to spread awareness of 529s. Nevada hopes the new legislation, combined with an $800,000 recently approved publicity campaign for the plans, will generate more interest.

“These products have only been around for 15 years,” DeLorenzo says. “With that in mind, I’m actually impressed with the amount of people who are aware of these plans.”

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